Home FCA Handbook IPRUINV IPRU-INV 5 IPRU-INV 5.7 Qualifying property and qualifying undertakings

This chapter includes rules that refer to provisions of the UK CRR in the form in which it stood at 31 December 2021. That version of the UK CRR can be found on legislation.gov.uk using this link .

You are viewing IPRU-INV 5.7 Qualifying property and qualifying undertakings as of . IPRU-INV 5.7 Qualifying property and qualifying undertakings was last updated on 05/11/2016.

IPRU-INV 5.7 Qualifying property and qualifying undertakings

Qualifying property and qualifying amount defined

05/11/2016R

Qualifying property is any freehold or leasehold (or the equivalent tenure in Scotland or other territories) land and buildings purchased or secured by way of a mortgage (or other form of secured long-term arrangement) where the security for the liability is the property (and does not include any other allowable assets). The qualifying amount is the lowest of:

  1. (a)

    85 per cent of the current market value of the property (if known);

  2. (b)

    85 per cent of the net book value of the property;

  3. (c)

    the amount of the liability outstanding under mortgage or other secured long term arrangement, excluding any part of the liability repayable within one year.

05/11/2016G

IPRU-INV 5.7.1R can be illustrated as follows:

Current market value£200,000
Net book value£100,000
Mortgage£70,000, including £5,000 payable within one year
Qualifying amount is the lowest of:
(a) 85% x £200,000 =£170,000
(b) 85% x £100,000 =£85,000
(c) £70,000 - £5,000 =£65,000
i.e. £65,000 

Qualifying undertakings

05/11/2016R

A qualifying undertaking is an arrangement between a firm and an approved bank which:

  1. (a)

    is in the form prescribed by the FCA for the purposes of this rule; and

  2. (b)

    complies with the appropriate limitations set out in IPRU-INV 5.8.2R(7).