Property Funds

Funds. A Summary of property funds.

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Property Funds
Property Funds.

Limited Partnerships

A limited partnerships (LPs) are incorporated and registered in accordance with the Limited Partnership Act 1907.

They are alternative investment funds and unregulated collective investment schemes for the purposes of UK regulation and they are not authorised or otherwise approved by the FCA.

Marketing LPs is subject to tight rules in the UK and Europe. LPs are commonly used where two or more investors wish to combine their resources (such as private, corporate or pension funds) in order to undertake a specific investment transaction.

An LP consists of two types of partner: limited partners and at least one general partner. The general partner manages the LP and are responsible for all of the debts and liabilities of the LP; where as limited partners invest in the LP and may not take part in management; they are not liable for the debts and obligations of the LP beyond their investment in it as long as they are not so involved. Limited partners can either be individuals or legal bodies (such as a company) but the same entity cannot be both a general partner and a limited partner. Limited partners must not take part in the management of the LP. If they do, they will be treated as a general partner and become liable for the LP's debts and obligations. As soon as an LP agreement has been signed and the LP created, the general partner will enter into a management agreement appointing Sapphire as manager to operate the LP as an alternative investment fund and collective investment scheme. The LP will use investors' subscription monies, together with funds borrowed from the chosen lender (if applicable) to undertake the required transaction and pay associated costs and fees.

The general partner of the LP (a special purpose vehicle in the form of a limited company established and operated by Sapphire) will hold legal title of the assets on behalf of the LP. In the case of the LP purchasing property, a nominee company may also be required to hold legal title to the properties jointly with the general partner (particularly where there is bank debt).

If borrowing is used it is always on a limited recourse basis; the lender will only have recourse to the assets of the LP and not to investors personally (as long as they comply with the partnership agreement and so not get involved in management).

An EPUT is an unregulated collective investment scheme, is entirely UK based and benefits from exemption from UK gains tax on the basis that all of it’s unit holders are tax exempt. An EPUT is a permissible investment of most pension schemes. We have acted as the property adviser to EPUTs which have invested in property funds.
With the changes in the Finance Act 2012, REITs are now more attractive to both investors and the property sector. We are currently working towards a REIT listing on the AIM market with a prominent real estate company. In conjunction with the London Stock Exchange, we can assess whether your company would benefit from a REIT listing.

Please note that this is only a condensed summary of the taxation and legal legislation and should not be construed as constituting advice which an investor should obtain from his or her own investment or taxation adviser before applying for an investment in any fund. The value of any tax reliefs will depend on the individual circumstances of investors.

Sapphire Capital Partners LLP does not give tax advice and recommends that you consult a tax adviser if you are in any doubt about any of the technical aspects relating to property funds.

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