PART IISPECIFIED ACTIVITIES

Chapter XVRegulated Mortgage Contracts

The activities

Regulated mortgage contracts61

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, where the contract was entered into after the coming into force of this article.

3

In this Chapter—

a

a “regulated mortgage contract” means a contract under which—

i

a person (“the lender”) provides credit to an individual or to trustees (“the borrower”); and

ii

the obligation of the borrower to repay is secured by a first legal mortgage on land (other than timeshare accommodation) in the United Kingdom, at least 40% of which 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;

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 paragraph (3)(a)(ii)—

a

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;

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;

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; and

d

“timeshare accommodation” has the meaning given by section 1 of the Timeshare Act 1992 31.