Jersey: Property Unit Trusts

Last Updated: 2 December 2004
Article by Edward Quinn and Eve Kosofsky

Prepared by the Real Estate Investment Funds Team


As a politically stable and tax neutral jurisdiction with over 40 years accumulated experience as an international finance centre, Jersey has gained a strong reputation as a prime location in which to establish investment structures of all descriptions including a large number of property funds.


Property unit trusts have recently become very popular as a result of changes in the UK legislation relating to stamp duty land tax ("SDLT"). Most transactions involving the transfer of an interest in land situated in the UK attract a charge to SDLT at a rate of up to 4% of the value of the property. On the introduction of SDLT, transfers of UK situated land to and from partnerships were expressly excluded from this tax.

The exemption from SDLT which applied to the transfer of interests in partnerships or to the transfer of property into a partnership was removed by the Finance Act 2004 and accordingly such transactions fall within the SDLT regime. However, transfers of units in offshore unit trusts which hold interests in land situated in the UK remain exempt from the SDLT regime.

This brief guide has been prepared by the Real Estate Investment Funds team at Carey Olsen for the purpose of giving clients and professional intermediaries a general overview of Jersey property unit trusts, now commonly referred to as JPUTs.


Jersey unit trusts are increasingly used to hold interests in land situated in the United Kingdom as it is possible to transfer units in an offshore unit trust in a manner that exempts the transaction from SDLT. To qualify, it is necessary for the owner of the interest in land to be able to transfer in compliance with the relevant provisions of Section 64A of the UK Finance Act 2003.

To obtain the benefit of the exemption from SDLT, Section 64A requires three conditions to be met in respect of the initial property or property interest transfer to the Jersey unit trust:

  1. immediately before the acquisition of the property, there must be no units of the scheme in issue and there must be no assets held by the trustees for the purposes of the scheme;
  2. the issue of units in the scheme to the vendor must be the only consideration for the acquisition of the property; and
  3. immediately after the acquisition, the vendor must be the only unit holder of the unit trust scheme.

The unit trust scheme under Section 64A must be regarded as a collective investment scheme as defined by Section 235 of the Financial Services and Markets Act 2000. For these purposes it is necessary for the unit trust to have a minimum of two unitholders. This requirement is easily met by ensuring that a subsequent purchaser of the units uses two entities to acquire the units or by the use of nominee entities to hold units.


The unit trust is a legal structure whereby legal ownership of the trust assets is vested in a trustee who holds these on trust for the benefit of the unitholders. Under Jersey law a unit trust must be constituted by a written instrument which sets out, in effect, the terms on which the trustee holds the trust assets for the unitholders.

The unit trust may be constituted with or without a manager. Where a manger is appointed its role will be to undertake the management and general administration of the trust.

Alternatively, this function can be undertaken directly by the trustee. In addition, where a property unit trust is concerned, it is usual for a property manager to be appointed by the trustee to manage the property and deal with matters such as tenant issues or rent collection.

Typically, trust instruments under Jersey law will contain provisions detailing the extent of the trustee’s powers and discretions, governing the appointment, removal or retirement of the trustee or regulating the issue, redemption and valuation of units.


The Jersey unit trust benefits from other tax advantages. It is transparent for UK income tax purposes so long as the trust qualifies as a "Baker Trust", which is to say that it contains provisions that ensure that the unit trust’s income is vested directly in the unitholders as it arises and does not form part of the trust fund. Also, where the trustee is located offshore and the unit trust is managed and controlled offshore, the trustee will be exempt from UK capital gains tax on the sale of UK property.

There are no taxes, registration fees or duties payable locally in respect of the establishment or administration of a unit trust. Where, as in most cases, the unitholders are not Jersey resident the trustee can take the benefit of a concession from the Jersey Comptroller of Income Tax which exempts the trust from any tax on income arising outside Jersey and from tax on any interest earned on bank and building society deposits within the Island. Distributions, for example of income, are paid gross to non Jersey resident unitholders. REGULATORY

Jersey unit trusts are regulated under the following legislation:

  1. the Control of Borrowing (Jersey) Order 1958 ("COBO")
  2. the Collective Investment Funds (Jersey) Law 1988 ("CIF Law"); and
  3. the Financial Services (Jersey) Law 1998 ("FS Law").

So far as property unit trusts are concerned the degree of regulation varies depending largely on the number of investors and their level of financial sophistication.


Consent to the establishment of a property unit trust must be obtained form the Jersey regulator, the Jersey Financial Services Commission (the "Commission"). This takes the form of a consent to the raising of money and issue of units under the COBO. A unit trust can be established as a very private unit trust where there are no more than 15 investor unitholders. For such structures the authorisation process has been streamlined and consent will usually be granted within two or three days. Details of beneficial owners are required to be disclosed to the Commission on a confidential basis.


These are regulated under the COBO. They include structures with an element of pooling of assets by a number of investors and where there is an offer to subscribe for units made to potential investors by by way of an offer document. Units must not be offered to more than 50 investors or listed on any stock exchange. The Commission will want to review the offering document but otherwise the regulatory policy is flexible. The Commission will require the trustee of a Jersey unit trust to have two Jersey resident directors on its board.


The unit trust will be regulated under the CIF Law if units are to be offered to more than 50 investors or are to be listed on a stock exchange. Under the CIF Law, Jersey functionaries to the unit trust (for example the trustee or the manager) must obtain permits from the Commission.

Collective investment funds are categorised as either unclassified funds or as expert funds. Unclassified funds are subject to a higher level of regulatory scrutiny although today they are unusual in the context of property unit trusts.


For funds aimed at institutional and high net worth investors a new expert category of funds has recently been introduced. These also are regulated under the CIF Law. Expert Funds can be established on the basis of a self-certification approach without the requirement for any formal regulatory review of the fund or its promoter. There is a minimum investment level of US$100,000 and the Commission will issue permits within 3 days.

Although in relation to a unit trust constituted as an Expert Fund the Commission will require the trustee to have two Jersey resident directors on its board, there is no requirement to have a Jersey manager provided it has a separate Jersey based administrator where the fund is open ended. If the fund is closed-ended the trustee can perform the administration function. Investors are required to sign an investor warning and they have to fall within one of the prescribed "Expert Investor" categories. The regulatory approval process is speedy and has been substantially streamlined. The Commission will not impose any investment restrictions on such structures.


Trust company business is regulated under the FS Law. Where the trustee of a unit trust is a professional corporate trustee it will have a registration under the FS Law. However, it is possible to establish a special purpose company to act as a private trustee company which, subject to meeting certain criteria, can take the advantage of an exemption from the requirement to register under the FS Law.


Before a Jersey unit trust can be established the trustee/administrator will need to identify the beneficial owners behind the structure and may need to obtain due diligence documents to meet its obligations under the Island’s anti-money laundering legislation.


The Carey Olsen team has substantial experience in setting up property unit trusts and advising purchasers, vendors, investors and finance parties. We have developed a set of template documentation to deal with all aspects of these transactions. Our action list and document list are available to clients and professional intermediaries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions