Bill Dhariwal considers the implications of buying or holding property in a trust and identifies rules likely to be implemented.

Chevron Down

Should I use a Trust to buy or hold property and are the rules changing?

I am often asked about the use of trusts when purchasing or holding property on behalf of different types of clients including investors, families and newly married couples.

The idea of trusts dates back to the Crusades when Knights would leave their property and other assets for trustees to manage whilst they were away.

There are lots of different types of trust arrangements.  Over the years, my firm has drafted and acted as trustee in several different types of trusts for use in property ownership including bare, life interest and discretionary trusts.

The majority of trusts are co-ownership trusts where spouses or partners own property together either as joint tenants or tenants-in-common.  In appropriate circumstances, such as where there have been uneven contributions to the purchase price, a Declaration of Trust document is often drafted as evidence of the trust and other agreements.  

The government has recently launched a consultation on the proposed disclosure of trusts when involved in UK land ownership. The consultation closes on 21 February 2024 and can be found on the website.  

I set out below the basics of trust ownership and comment upon the changes the government is seeking.

What is a trust?

A trust is a way of managing assets such as cash, shares, or land for other people.

Usually, a settlor(s) puts assets into a trust for the benefit of another person(s) (beneficiary(ies)) and appoints another person(s) to manage those assets on behalf of the beneficiary(ies), called a trustee(s).

Trusts enable the legal ownership and the beneficial ownership of property to be separated and recognised.  The legal ownership details the owner(s) of the legal title who will be the one(s) registered at Land Registry and usually able to legally transfer the property by signing a sale contract and deed.  However, behind the legal owner(s) there may be beneficial owners who are entitled to the benefit of the property and who can control the legal owners.  By way of example, beneficial owner(s) may be entitled to stay in the property for life, receive income from the property or be entitled to some or all of the proceeds of sale.  

What are the different types of trusts?

Trusts come in various forms. They can be created expressly by a settlor known as an Express Trust.  They can also be created in other ways, called an Implied Trust.

Where a trustee has very little control over the assets and will only be required to transfer assets to a beneficiary. This is known as a Bare Trust.

However, where a trustee has discretion to make certain decisions about the use of assets, this is called a Discretionary Trust.  

When in a Will or Trust Deed a settlor grants a person a right to occupy property until their death or re-marriage, this is a type of Life Interest Trust.

The above are only a few examples of the different types of trusts and the main differences between them.

What are the main benefits and drawbacks of using trusts to buy or hold property?

The main benefits include asset protection, avoiding probate, tax benefits and maintaining control over an asset including naming the intended beneficiaries and defining any flexibility the trustees have in managing the asset via the Trust Deed.

The potential drawbacks are set up costs, requirement for ongoing management, potential for unforeseen circumstances in the future and loss of control over decision making to Trustees.

Why are the government seeking changes relating to property trusts?

The government are seeking greater transparency about who owns and controls land in order to be able to identify those who (a) hide ownership of property via trusts for criminal purposes and (b) to prevent the misuse of land by those who, for instance, seek to avoid property rates and taxes, liability for remediation of high-rise buildings, compulsory purchase or repair responsibilities.  

For the above reasons, the government believe that the true (beneficial) owners of property should be easily identified through a register or similar mechanism.

Such transparency requirements have been heightened since the Russian invasion of Ukraine and follows legislation that aims to tackle money laundering such as the Economic Crime Act 2022 and the Economic Crime and Corporate Transparency Act 2023.

As a result of the clear societal interest, the government wish to lift the veil of secrecy that certain trusts provide relating to the true beneficial owners.

What are the main ways the government currently seeks transparency over the ownership of assets?

The three main regimes the government currently uses to seek transparency over the ownership of assets is as follows:

(a) The People with Significant Control (PSC) regime – UK companies and LLPs are required to notify their beneficial owners to Companies House.  This information is then publicly available.

(b) The Trust Registration Service (TRS) – UK trusts and certain non-UK trusts are required to file trust information with HMRC.  This information is generally not available to the public.

(c) The Register of Overseas Entities (ROE) – Overseas entities that are registered proprietors of UK land must register with Companies House and in doing so provide information regarding their beneficial owners.  This information is publicly available and maintained by Companies House.


Settling property into a trust is a trusted mechanism to ensure that an asset is distributed to defined beneficiaries according to the settlors intentions and can assist with asset protection, tax mitigation and the requirement for probate.

My view is that with the general momentum is in favour of greater transparency; specifically relation to the identification of the true owners of assets legally held by companies and trusts.  

Save for privacy and data concerns, there are few counter-arguments against greater transparency due to the public interest argument espoused by government.

Subject to certain safeguards including the requirement to protect certain sensitive information such as the identification of minors, I believe it is likely that trust information will be publicly available, probably through Land Registry records, in the not-too-distant future.

Further Information

Should you require any advice or assistance in connection with property trusts including the drafting and management of such trusts, please do not hesitate to contact me on DDI: 014899 864 117 or E:

The contents of this article does not constitute legal advice and must not be relied upon as such.