72Alternative property finance: land sold to financial institution and leased to individualU.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 freehold) or a sub-lease (if the interest acquired is leasehold) (“the second transaction”), and
(c)enters into an agreement under which the individual has a right to require the institution or its successor in title 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.
(7)In this section “financial institution” means—
(a)a bank within the meaning of section 840A of the Taxes Act 1988,
(b)a building society within the meaning of the Building Societies Act 1986 (c. 53), or
(c)a wholly-owned subsidiary of a bank within paragraph (a) or a building society within paragraph (b).
For the purposes of paragraph (c) a company is a wholly-owned subsidiary of a bank or building society (“the parent”) if it has no members except the parent and the parent’s wholly-owned subsidiaries or persons acting on behalf of the parent or the parent’s wholly-owned subsidiaries.
(8)In the application of this section to Scotland—
(a)the reference to a freehold interest is a reference to the interest of the owner, and
(b)the reference to a leasehold interest is to a tenant’s right over or interest in a property subject to a lease.
Until the appointed day for the purposes of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 (asp 5), the reference in paragraph (a) to the interest of the owner shall be read, in relation to feudal property, as a reference to the estate or interest of the proprietor of the dominium utile.
(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.
Commencement Information
I1Pt. 4 wholly in force at Royal Assent subject to Sch. 19, see s. 124, Sch. 19 para. 1(1)