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.

IPRU-INV 5.7 Qualifying property and qualifying undertakings

Qualifying property and qualifying amount defined

IPRU-INV 5.7.1RRP

1Qualifying 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.

IPRU-INV 5.7.2GRP

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

IPRU-INV 5.7.3RRP

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).