PART II SPECIFIED ACTIVITIES
Chapter XVRegulated Mortgage Contracts
The activities
Regulated mortgage contractsI161
1
Entering into a regulated mortgage contract as lender is a specified kind of activity.
2
Administering a regulated mortgage contract is also a specified kind of activity, F7where the contract was entered into F1by way of business after the coming into force of this article.F7where—
a
the contract was entered into by way of business on or after 31st October 2004; or
b
the contract—
i
was entered into by way of business before 31st October 2004, and
ii
was a regulated credit agreement immediately before 21st March 2016.
3
In this Chapter—
F2a
F13subject to paragraph (5), a contract is a “regulated mortgage contract” if, at the time it is entered into, the following conditions are met—
F8i
the contract is one under which a person (“the lender”) provides credit to an individual or to trustees (“the borrower”);
ii
the contract provides for the obligation of the borrower to repay to be secured by a first legal mortgage on land (other than timeshare accommodation) in the United Kingdom;
iii
at least 40% of that land is used, or is intended to be used, as or in connection with a dwelling by the borrower or (in the case of credit provided to trustees) by an individual who is a beneficiary of the trust, or by a related person;
F8i
the contract is one under which a person (“the lender”) provides credit to an individual or to trustees (“the borrower”);
ii
the contract provides for the obligation of the borrower to repay to be secured by a mortgage on land in the EEA;
iii
at least 40% of that land is used, or is intended to be used—
aa
in the case of credit provided to an individual, as or in connection with a dwelling; or
bb
in the case of credit provided to a trustee which is not an individual, as or in connection with a dwelling by an individual who is a beneficiary of the trust, or by a related person;
b
“administering" a regulated mortgage contract means either or both of—
i
notifying the borrower of changes in interest rates or payments due under the contract, or of other matters of which the contract requires him to be notified; and
ii
taking any necessary steps for the purposes of collecting or recovering payments due under the contract from the borrower;
but a person is not to be treated as administering a regulated mortgage contract merely because he has, or exercises, a right to take action for the purposes of enforcing the contract (or to require that such action is or is not taken);
c
“credit" includes a cash loan, and any other form of financial accommodation.
4
For the purposes of F3paragraph 3(a)—
F10a
a “first legal mortgage" means a legal mortgage ranking in priority ahead of all other mortgages (if any) affecting the land in question, where “mortgage" includes charge and (in Scotland) a heritable security;
F10a
“mortgage” includes a charge and (in Scotland) a heritable security;
b
the area of any land which comprises a building or other structure containing two or more storeys is to be taken to be the aggregate of the floor areas of each of those storeys;
c
“related person", in relation to the borrower or (in the case of credit provided to trustees) a beneficiary of the trust, means—
i
that person’s spouse F4or civil partner;
ii
a person (whether or not of the opposite sex) whose relationship with that person has the characteristics of the relationship between husband and wife; or
iii
that person’s parent, brother, sister, child, grandparent or grandchild; F11and
F145
In this Chapter, a contract entered into before 21st March 2016 is a “regulated mortgage contract” only if—
a
at the time it was entered into, entering into the contract was an activity of the kind specified by paragraph (1), or
b
the contract is a consumer credit back book mortgage contract within the meaning of article 2 of the Mortgage Credit Directive Order 2015.