Readers' forum: Property transfers

A new client has appointed us and they have incorporated their property portfolio using a beneficial interest company trust (BICT). These purport to allow the client to incorporate without having to refinance and retain the legal title and mortgage debt in the name of the individuals. This is by way of a declaration of trust and an agreement appointing the individuals as the company’s agent in ‘making the mortgage repayments in accordance with the debt delegated to it’.

Fundamentally we have concerns with the proposed accounting and tax treatment of the incorporation. One of our main concerns is the treatment of the interest payments on the mortgages for the properties because the mortgage debt has not been legally novated and it is not possible (we understand) to assign the burden of the contract with the mortgage lenders to the company.

Having reviewed the loan relationship legislation we cannot see how...