Solution for Trustees Looking to Generate Capital for an Insolvent Trust

• Introducer: Corporate trustees in Jersey
• Client: (U)HNW family with multiple UK properties held in a trust
• Requirement: Fast equity release to settle a tax liability and provide liquidity to the trust
• Initial facility: £2,000,000
• Development finance: Competitive facility to fund refurbishment and extension works

Corporate trustees in Jersey approached Enness on behalf of a high-net-worth family whose UK property assets were held within a trust. The trust had limited income but was facing a significant tax liability. Without access to additional liquidity, settling the tax bill would have placed considerable pressure on the trust’s finances.

The immediate priority was to release equity from one of the UK properties and use the proceeds to settle the liability. The trustees also intended to sell the property, with the sale proceeds ultimately returning capital to the trust.

Enness reviewed the properties held by the trust to determine which asset offered the most suitable route to raising the required funds. During this process, a London property was identified as particularly suitable. The property had not been modernised for a number of years, while comparable homes nearby had undergone extensions and refurbishment and were achieving significantly higher values.

The first step was to secure a £2 million, two-year facility against the property, providing the trustees with the liquidity required to address the immediate tax liability. With that priority dealt with, attention turned to the property itself and whether its value could be improved before sale.

Enness helped the trustees engage design and development specialists to assess the property and identify practical improvements. Their assessment indicated that refurbishment and extension works could materially enhance the property’s value and, in turn, increase the amount of capital that could ultimately be returned to the trust.

Enness then approached specialist lenders to structure finance for the proposed works, with repayment planned from the eventual sale of the property. A competitive development finance package was secured, allowing the refurbishment and extension programme to proceed.

The two-stage approach gave the trustees a way to address the immediate tax liability while also working towards a stronger exit position. Rather than simply selling the property in its existing condition, the trust was able to explore how targeted improvements could increase its value and generate additional liquidity.

This case demonstrates how equity release can form part of a wider financing strategy where assets are held within complex structures. For trusts with valuable property but limited immediate income, the right combination of short-term finance and development funding can provide greater flexibility, subject to lender criteria and the viability of the proposed exit.

Enness works with high-net-worth families, trustees and international structures where conventional lending may not provide the flexibility required. If you are considering UK property finance against assets held within a trust, our team can assess the wider circumstances and explore suitable lending options.

Risk Warning:
Borrowing against property carries risk. If you do not meet the terms of a secured facility, the lender may take enforcement action against the property. Development projects can also involve delays, additional costs and changes in property values, which may affect the proposed exit strategy.

Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, project assessment and lender criteria. Trustees should obtain appropriate independent legal and tax advice before entering into any financing arrangement.