Content Options

IPRU-INV 5.7 Qualifying property and qualifying undertakings

Qualifying property and qualifying amount defined

IPRU-INV 5.7.1R

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 5.7.2G

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 5.7.3R

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).