Can you explain why is it more beneficial to structure property ownership through a company with shares held in a Holdings Trust, rather than directly in a Property Trust?
Question
Can you explain why is it more beneficial to structure property ownership through a company with shares held in a Holdings Trust, rather than directly in a Property Trust?
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Answer
When it comes to building a successful property portfolio, structure is everything. Over the years, we’ ve worked with countless investors and refined the best practices for protecting assets, minimising tax liabilities, and enabling long-term growth. Initially, many property investors favoured holding properties directly in trusts due to the perceived benefits of asset protection and continuity.
However, our experience has shown that a more flexible and scalable structure exists: owning property through a company, with the shares held in a Holdings Trust.
Here’ s why this structure is the superior choice for serious investors. 1. Control and Efficiency When you own property through a trust, all significant decisions must be signed off by an independent trustee. This creates delays for crucial actions like refinancing, signing leases, or selling properties. As your portfolio expands, the dependency on trustees can become a bottleneck. On the other hand, if the property is owned by a company( with you as a director), you gain the ability to make fast decisions, allowing for quicker actions without sacrificing asset protection through the trust.
2. Lower Administrative Burden A trust holding property directly involves an overwhelming amount of paperwork. Every document, from leases to bond applications, must be signed by all trustees, which can delay deals and complicate financing.
In contrast, a company structure allows you to manage the property like a business streamlining administrative tasks, making financing easier, and accelerating growth. The shares in the company can still be held in a Holdings Trust, maintaining the asset protection benefits.
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