Jersey 2025 and beyond

Authors:  Simon Vardon, Independent Director, James Le Bailly, Partner, Real Estate Lead for KPMG in the Crown Dependencies and Tom Davies, London Office Head for Bedell Cristin

For over 20+ years, Jersey has developed to be a leading financial centre supporting the legal, tax, administration and accounting needs of structures investing into UK real estate.  Jersey holds an enviable position, combining the benefits of a stable, well-regulated jurisdiction, with a highly competitive suite of products.  It also has a reputation for excellent service-levels, from trusted and knowledgeable professionals. 

The international regulatory and tax landscape has evolved greatly in the last 20 years and many of the past motivations for structuring through Jersey have changed.  As we look ahead through the rest of 2025 and beyond, there remains a compelling number of reasons as to why Jersey can be a leader in providing a variety of structuring options to support a global investor base investing into UK real estate assets.

A little history

Jersey’s relationship with real estate structures commenced with the rush of transfers of large UK real estate assets into Jersey property unit trusts (JPUTs) around 2004 and 2005.  These transactions took advantage of seeding relief from SDLT, which had been sign-posted to end, and was eventually abolished in 2006.  The assets were transferred into JPUTs with a future exit event in mind, whereby it would be beneficial to divest the units in the JPUT instead of the asset directly as a result of a saving in transaction costs and further potential SDLT savings.

Whilst seeding relief was withdrawn for unit trusts in 2006, the tax landscape was such in the UK, that there was a significant advantage for offshore investors compared to onshore UK investors, owing to gains being outside of Capital Gains Tax for non-UK residents and continuing savings on SDLT where divesting of units in the JPUT rather than the underlying property directly.

In 2019 new UK tax rules were introduced, making gains from direct and indirect disposals of UK land subject to taxation in the UK.  The changes largely levelled the playing field (offshore v onshore) from a tax perspective although the SDLT savings on disposals remained. 

However, by 2019 Jersey had become sufficiently integral to investors, supporting significant volumes of funds and structures investing into UK real estate that the impact of the tax changes were not felt as much as they might have been.  Law firms had dedicated real estate practices, which was also mirrored by Administration, Accounting and Tax firms.  The quality of service being delivered compared very well with other jurisdictions and Jersey structures, led by the JPUT, were internationally recognised and accepted.  Investors from pension funds and sovereign wealth funds, to high-net-worth families were all comfortable to transact through the acquisition of units in JPUTs to acquire their target UK assets.  Whilst the tax advantages had diminished, Jersey’s reputation as a premier “tried and tested” jurisdiction for structures remained with quality infrastructure and service providers backed by strong and proportionate regulation.

It is true that up to 2019 Jersey was often a default structuring choice.  So where are we today, as we navigate 2025 and where might Jersey fit into the current tax and regulatory landscape?

International regulation has been shaped by the OECD BEPS actions designed to minimise base erosion and profit shifting from high-tax jurisdictions to low or no-tax jurisdictions, with themes of ever-increasing transparency and fairness.   The BEPS actions have been signed-up to by approximately 150 countries and jurisdictions (including Jersey).  Significant regulatory and tax changes have been developed for adoption into national law.

Regulation was also swiftly enacted in the aftermath of the global financial crisis.  The EU introduced AIFMD, designed to strengthen investor protections.  Full AIFMD compliance, and its associated costs, is mandatory for EU domiciled AIFMs with EU domiciled funds, but AIFMD also creates some additional obligations for non-EU funds with non-EU AIFMs which market to EU investors.  Funds domiciled in Jersey wishing to market to EU investors, need to follow the National Private Placement Regime of the relevant Member State.  This is now also the situation for UK funds, marketing into the EU post Brexit.  In a nutshell, the cost impact on Jersey of the introduction of AIFMD is significantly less than on Luxembourg due to the higher levels of red tape and regulatory compliance requirements.

Outside of regulation, a number of significant geopolitical, social and climate incidents have shaped, and continue to shape, the macro-economic backdrop, from pandemics, energy price and inflation spikes to extreme weather.  The administration change in America is also not to be underestimated as it doesn’t exactly contribute towards “certainty” from threats of territory takeovers to tariffs.   Many headwinds remain, with the recent April 2025 IMF outlook noting that downside risk dominated the outlook.

It can certainly be said that investment volumes of UK real estate were lacklustre in 2023 and 2024. However, there is good evidence from the cyclical nature of real estate that as we move into the second half of 2025 and into 2026 we will see confidence return to the market and our conversations with asset managers, lawyers and practitioners in the transactional space support this view of an uptick.

Structuring UK real estate investment in 2025 and beyond

With so much change in the tax and regulatory landscape, we’ll now look at the most likely candidates when appraising a new investment structure to hold a UK real estate asset.

The private REIT

Traditionally seen as a product for listed real estate groups, in recent years we have seen the rise of the private REIT.  Recent changes to the regime, have made it more accessible and more cost effective to use including the relaxation of the listing requirement to the benefit of institutional investors.

The ability of UK REITs to remove latent gains and offer a more competitive effective tax rate makes them attractive.  With the recent rise in UK Corporation Tax rates, which rose from 19% to 25% in 2023, (and announced by Chancellor, Rachel Reeves to remain at this level for the duration of Parliament) there has been a noticable up-tick of interest in UK REITs.

Whilst a UK REIT has to be UK tax resident, a Jersey company (with a UK board of directors) is often the preferred choice for the REITCo.  There are a number of benefits when the requirements of Jersey’s Company Law is compared with the UK’s Companies Act, with the most compelling being ease of “money out” with distribution rules less prescriptive.  There is a risk with using a UK company that the more cumbersome dividend calculation rules of the Companies Act can result in cash being trapped.  It is easy to structure around this by using a Jersey company, because Company Law in Jersey operates a simple solvency test when making any kind of distribution and no need for available profits.  A further benefit with using a Jersey company is the absence of stamp duty when the shares in the company are sold and there may also be less risk in using a Jersey company given the clarity of Jersey’s tax treaty with the beneficial owner’s jurisdiction.  More minor differences, such as the absence of mandatory audits (UK companies have a mandatory audit once a size threshold is crossed) and the absence of public filings for private companies, may also be of relevance to the choice of domicile in some situations.

The QAHC

The Qualified Asset Holding Company regime was introduced in 2022.  This new regime has proven very popular with other alternative asset classes, most notably for investing into debt assets.  The regime is not designed for use where the underlying asset is UK real estate.  However, the regime could be beneficial for investment into non-UK real estate.

Similar to a REITCo, the companies which elect into the QAHC regime need to be UK tax resident, but may be domiciled outside the UK in a jurisdiction like Jersey.  For the reasons covered above, using a Jersey company with a UK board of directors may prove to be a popular structuring option for QAHCs.

JPUTs

The JPUT remains a popular structure for investment into UK real estate.  The HMRC elections (Transparency and Exemption) have kept the JPUTs competitive.  They remain a low cost and flexible option and are often used for single asset deals for the reasons set out below.

It is worth remembering that the UK REIT regime comes with a number of rules and as such not all assets or strategies will be able to utilise the REIT regime.  There are no such regime rules for JPUTs.

We also continue to see that simple investor preference still motivates the use of JPUTs.  This is most common where the investors are of an exempt tax profile, such as pension funds, sovereign wealth funds or charities.  JPUTs remain a very effective choice of vehicle for joint venture arrangements, owing to the flexibility that can be included within the trust instruments.

JPUTs remain palatable to investors of all profiles.  Owing to underlying assets being acquired through the acquisition of units in the JPUT, many JPUTs are proving to be evergreen structures.  This situation remains applicable as we look forward to 2025 and beyond,  and so we expect to see the existing volume of PropCo JPUTs continue to be recycled in this way.

Funds

Alongside regulatory considerations and tax neutrality, cost is currently high on the agenda when considering the establishment of a new fund, owing to the increased cost of debt finance putting pressure on IRRs, and owing to the attention that cost lines receive during barren investment spells such as the past two years, meaning that cost is front-of-mind for many fund managers at this time.  The structuring cost differential is, as flagged above, often material between Jersey and competitor jurisdictions such as Luxembourg and the UK. 

With focus on the closed-ended fund products, a fund domiciled within the EU, such as a RAIF fund product in Luxembourg, will have to factor in the full compliance costs of AIFMD, namely, an AIFM and a Depositary and the regulatory reporting requirements.  Notwithstanding the volumes of funds domiciled in Luxembourg, it is also an expensive jurisdiction. 

The UK has not been overly competitive in the closed-ended fund space for many years, however, the new Reserved Investor Fund (RIF) became available from 19 March 2025, with secondary legislation now finalised.  Whilst the UK is outside of the EU and thus full AIFMD compliance does not apply, the RIF will look and feel similar to a Luxembourg fund.  The fund itself is unauthorised, but the mandatory roles (and costs) of an AIFM and Depositary are present. 

Jersey has a proportionate regulatory approach to its suite of funds.  Where investors are professional, eligible or expert (definitions apply), then there is not a mandatory cost burden of additional functionary roles.  Marketing into the EU works perfectly well under National Private Placement Rules and there is little inefficiency with the absence of a Home Member State, when in practice the majority of funds market into only one, two or three EU countries. [https://www.jerseyfinance.je/our-work/national-private-placement-regimes/].

Operational ease and speed of launch is also where Jersey funds outperform Luxembourg and UK.  This has in the past been a deciding factor for using Jersey, for example where an anchor investor needs to be onboarded against a set deadline, or the timeline associated with the first closing and investment acquisition is challenging.   The Jersey Private Fund is the most cost-effective fund product and has proven highly popular with over 700 JPFs established since its launch in 2017.

Jersey fund products can be combined with the UK REIT regime or the Exemption election where the conditions required for those regimes/elections are met.

Final thoughts – and Jersey playing its part

James:  OK Simon and Tom, we have detailed the different structuring options that Jersey offers but is there a particular structure that either of you have seen an uptick in recently or one where perhaps the use has dwindled due to competition from other jurisdictions or changes in laws and regs?

Simon: Well, we know a structuring decision should always be made specific to the profile of investors, assets and strategies being employed – but without doubt, in the last few years, we have seen more REITs being set up, including the use of Jersey companies.  The recent softening of the UK REIT regime requirements has been helpful and, for a single asset deal – a JPUT is still very popular.  Is your view similar?

James:  Yes absolutely.  We talked about the recycling of the JPUT as transactions happen but we have also seen new JPUTs set up as the choice vehicle - for example for a new deal whereby there is a joint venture between an overseas investor partnering with a UK developer to construct a new build.  As for REITs – these have been very popular with the institutional investors we work with, especially those with a portfolio looking to benefit from the REIT tax benefits and the flexibility of Jersey company law.  My conversations with clients and industry folks have also suggested that although it is expected that there will be some competition between the new UK RIF and the JPUT as they both have some similar features, there are some very clear differences which investors recognise - not least the flexibility, lower cost and track record of the JPUT.

Tom: From our side as legal advisers, we're getting involved with a lot more new JPUT and REIT structures as new money and new managers enter the market. That's a positive message about the jurisdiction – there was a point a few years back where a big chunk of the work was servicing existing structures that had been established in Jersey, but we were not seeing the new structures coming through. That has definitely changed, and that's a consistent view from the partners I speak to at other offshore and onshore firms.

Simon:  And the wider consideration regarding Jersey and the competition?

James: I think we are in a great position but there is a risk of complacency.  Given the levelling of the playing field as it relates to tax in 2019, COVID arriving in 2020, geopolitical events and upheaval and uncertainty ever since, we find ourselves in a position where it is more important than ever to show off Jersey as a compelling choice to the clients and asset managers making the jurisdiction decision.  This isn’t just the structuring options but also the infrastructure and fabric including the capability and competence of our providers.  We are also in a different technological age than we were five years ago and as the market bounces back and transactions tick up, the admins, accountants, lawyers and, importantly, directors and trustees need to demonstrate our quality, above all – but also our ability and knowhow – that we are at the forefront.  How “good” the people are has often been the differentiator in domicile choice.

Tom: The quality of the infrastructure, including the technical expertise of the professionals, is a really important point. Jersey has a great jurisdictional brand for corporate real estate work in particular amongst onshore lawyers and tax advisers. The pretty strong feeling that we have is that the conversation always starts with Jersey, in the same way that it does, say for the Cayman Islands and hedge funds, or for Guernsey and captive insurance. We shouldn't undervalue that, and we shouldn't be complacent about it either.

Simon: I very much agree with you both.  It is critical that we all continue to play our part in ensuring that Jersey continues to demonstrate a compelling case - particularly as it is in a unique position of being able to compete on both quality and cost.  Jersey has demonstrated it can innovate and offer solutions. 

James:  Final thoughts then?

Tom: We're in a really good position – a great brand, strong track record, experts on the ground and laws that work. We can’t lose sight of the importance of consistent standards in service delivery because that cuts right through to the heart of the experience for the managers and investors who are making decisions on jurisdiction.

Simon: Jersey has an excellent suite of structuring options and an enviable reputation as a choice location for structuring UK Real Estate deals but we must continue to demonstrate the “why Jersey” through our focus on quality.  There is no doubt that our clients place value on using Jersey due to the complete package- an excellent structure choice, administered by a quality service provider, with excellent accounting and legal advisors in support.

Simon Vardon

Simon provides non-executive director services to real estate funds and investment groups domiciled in Jersey which invest into UK real estate.

He has more than 20 years’ experience within financial services, including being Global Head of Real Assets at Sanne Group Plc, a role which continued under the new ownership of Apex Group before making the change to providing governance services as a NED, licenced by the Jersey Financial Services Commission.

Simon is a Fellow of the Association of Chartered Accountants of England & Wales and a Fellow of the Association of Accounting Technicians.  He started his career in the Audit & Advisory business of Ernst & Young.

James Le Bailly

James is a partner and leads KPMG in the Crown Dependencies’ Real Estate Group, a multi-disciplinary team undertaking audit, tax and advisory work for KPMG’s clients including UK and overseas institutional investors such as sovereign wealth funds, pensions and global asset managers.

Having joined the KPMG Jersey office in 2006, James has over 19 years’ experience undertaking real estate audits including two years working in San Francisco and the Bay Area for KPMG’s Building, Construction and Real Estate Team.

His experience includes working with market traded companies, listed and private UK REITS, JPUTs and private fund structures and the asset classes he works with includes commercial, particularly Central London office, as well as UK logistics, and residential including PRS and student accommodation.

Tom Davies

Tom Davies advises on a wide range of real estate-related matters including transactions, financing, restructuring and listing, and heads Bedell Cristin's London office.

He is recognised by Chambers and Partners and Legal 500 for his client care and transactional skills and has significant experience with private funds and joint ventures. He has substantial experience in a wide variety of transactions including: the establishment of Jersey structures for holding and acquiring real estate; borrower side advice for property (and other asset) financings; the sale and purchase of Jersey asset holding structures; and corporate transactional and advisory work.

Tom works closely with the City’s prominent law firms and with many of the offshore corporate administration firms.