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, where the contract was entered into F1by way of business after the coming into force of this article.
3
In this Chapter—
F2a
a contract is a “regulated mortgage contract” if, at the time it is entered into, the following conditions are met—
i
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;
F6but such a contract is not a regulated mortgage contract if it is a regulated home purchase plan;
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)—
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 F5or 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; and
F7d
“timeshare accommodation” means overnight accommodation which is the subject of a timeshare contract within the meaning of the Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010.
Exclusions
Arranging administration by authorised personI262
A person who is not an authorised person does not carry on an activity of the kind specified by article 61(2) in relation to a regulated mortgage contract where he—
a
arranges for another person, being an authorised person with permission to carry on an activity of that kind, to administer the contract; or
b
administers the contract himself during a period of not more than one month beginning with the day on which any such arrangement comes to an end.
Administration pursuant to agreement with authorised personI363
A person who is not an authorised person does not carry on an activity of the kind specified by article 61(2) in relation to a regulated mortgage contract where he administers the contract pursuant to an agreement with an authorised person who has permission to carry on an activity of that kind.