Many lenders reportedly express nervousness regarding trusts or beneficial ownership, even when the legal title and registered charge on a property remain untouched, according to mortgage brokers. This reaction occurs despite the legal distinction between formal title and underlying beneficial interest, as outlined in HM Land Registry Practice Guide 24.
The guide confirms that the Land Registry records ownership of the legal estate, not beneficial interests. Furthermore, Practice Guide 19 states that a restriction entered later in the proprietorship register will not impact a charge registered beforehand. This suggests that a subsequent change in beneficial ownership does not, by itself, remove a lender's registered charge or alter its priority.
Bob Singh, founder of Chess Mortgages, noted that any arrangement beyond simple sole or joint ownership tends to 'spook most lenders'. Nouran Moustafa, Practice Principal at Roxton Wealth, observed that some lenders interpret 'ownership has changed' when only the economic beneficiaries of a property have shifted.
Lender policies on these matters are inconsistent. While some, like Aldermore and YBS Commercial, have published guidance or case studies for transferring properties into limited companies, others, such as Coventry for Intermediaries, will not accept applications for a limited company to buy from its directors or shareholders.