Finance Act 2003

72 Alternative property finance [F1 in Scotland]: land sold to financial institution and leased to individual U.K.

(1) This section applies where arrangements are entered into between an individual and a financial institution under which the institution—

(a) purchases a major interest in land (“the first transaction”),

(b) grants to the individual out of that interest a lease (if the interest acquired is [F2 the interest of the owner]) or a sub-lease (if the interest acquired is [F3 the tenant's right over or interest in a property subject to a lease]) (“the second transaction”), and

(c) enters into an agreement under which the individual has a right to require the institution F4 ... to transfer the major interest purchased by the institution under the first transaction.

(2) The first transaction is exempt from charge if the vendor is—

(a) the individual, or

(b) another financial institution by whom the interest was acquired under arrangements of the kind mentioned in subsection (1) entered into between it and the individual.

(3) The second transaction is exempt from charge if the provisions of this Part relating to the first transaction are complied with (including the payment of any tax chargeable).

(4) A transfer to the individual that results from the exercise of the right mentioned in subsection (1)(c) (“the third transaction”) is exempt from charge if—

(a) the provisions of this Part relating to the first and second transactions are complied with, and

(b) at all times between the second and third transactions—

(i) the interest purchased under the first transaction is held by a financial institution, and

(ii) the lease or sub-lease granted under the second transaction is held by the individual.

(5) The agreement mentioned in subsection (1)(c) is not to be treated—

(a) as substantially performed unless and until the third transaction is entered into (and accordingly section 44(5) does not apply), or

(b) as a distinct land transaction by virtue of section 46 (options and rights of pre-emption).

(6) The requirements of subsection (1), or (4)(b)(ii), are not met if—

(a) the individual enters into the arrangement, or holds the lease or sub-lease, as trustee and any beneficiary of the trust is not an individual, or

(b) the individual enters into the arrangements, or holds the lease or sub-lease, as partner and any of the other partners is not an individual.

[F5 (7) In this section “financial institution” has the same meaning as in section 71A.]

F6 (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) References in this section to an individual shall be read, in relation to times after the death of the individual concerned, as references to his personal representatives.

[F7 (10) This section applies only in relation to land in Scotland.]

Textual Amendments

F1 Words in s. 72 heading inserted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(6)

F2 Words in s. 72(1)(b) substituted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(2)(a)(i)

F3 Words in s. 72(1)(b) substituted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(2)(a)(ii)

F4 Words in s. 72(1)(c) repealed (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(2)(b), Sch. 11 Pt. 3(1)

F5 S. 72(7) substituted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(3)

F6 S. 72(8) repealed (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(4), Sch. 11 Pt. 3(1)

F7 S. 72(10) inserted (with effect in accordance with Sch. 8 para. 7 of the amending Act) by Finance Act 2005 (c. 7), Sch. 8 para. 3(5)

Commencement Information

I1 Pt. 4 wholly in force at Royal Assent subject to Sch. 19, see s. 124, Sch. 19 para. 1(1)