Section 504A | Diminishing shared ownership arrangements: refinancing ^F1

(1)This section applies to arrangements if under them—

(a)a person (“the customer”) has a beneficial interest in an asset,

(b)the customer disposes of some or all of their beneficial interest in the asset to another person (“the financier”),

(c)either—

(i)the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 504(7)), or

(ii)the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 504(1A)),

(d)the customer is to make payments to the financier amounting in aggregate to the consideration paid for the financier acquiring a beneficial interest as mentioned in paragraph (b) (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),

(e)the customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,

(f)the customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),

(g)the customer has the exclusive right to occupy or otherwise to use the asset, and

(h)the customer is exclusively entitled to any income, profit or gain arising from or attributable to the asset (including, in particular, an increase in its value).

(2)This section also applies to arrangements which supersede arrangements to which section 504 or subsection (1) of this section applies if under them—

(a)a person (“the financier”) acquires so much of the beneficial interest in an asset mentioned in section 504(1)(a) or subsection (1)(b) of this section as has not yet been acquired as mentioned in section 504(1)(d) or subsection (1)(e) of this section,

(b)either—

(i)the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 504(7)), or

(ii)the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 504(1A)),

(c)the customer mentioned in section 504(1) or subsection (1) of this section is to make payments to the financier amounting in aggregate to so much of the payments mentioned in section 504(1)(c) or subsection (1)(d) of this section as are yet to be paid (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),

(d)that customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,

(e)that customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),

(f)the customer has the exclusive right to occupy or otherwise to use the asset, and

(g)the customer is exclusively entitled to any income, profit or gain arising from or attributable to that asset (including, in particular, an increase in its value).

(3)For the purposes of subsections (1)(a) and (b) and (2)(a) it does not matter if—

(a)another person who is not the customer or the financier also has a beneficial interest in the asset, or

(b)the financier also has a legal interest in it.

(4)Subsection (1)(g) or (2)(f) does not prevent the customer from granting an interest or right in relation to the asset if the conditions in subsection (5) are met.

(5)The conditions are that—

(a)the grant is not to—

(i)the financier,

(ii)a person controlled by the financier, or

(iii)a person controlled by a person who also controls the financier, and

(b)the grant is not required by the financier or arrangements to which the financier is a party.

(6)Subsection (1)(h) or (2)(g) does not prevent the financier from—

(a)having responsibility for any reduction in the asset’s value, or

(b)having a share in a loss arising out of any such reduction.

(7)This section is subject to section 508 (provision not at arm’s length: exclusion of arrangements from sections 503 and 504, this section and sections 505 to 507).