Article 2 Interpretation

In this Order—

• “the 1998 Act” means the Bank of England Act 1998;

• “borrower” means a person who receives credit, and includes a person acting jointly with others, and a person acting as a trustee who receives credit jointly with other trustees;

• “buy-to-let mortgage contract” means a contract that, at the time it is entered into, satisfies the following conditions–

  1. (a)

     the lender provides credit to the borrower;

  2. (b)

     the obligation of the borrower to repay is secured by a mortgage on land in any EEA state;

  3. (c)

     at least 40% of the land is used, or is intended to be used, as or in connection with a dwelling on the basis of a rental agreement; and

  4. (d)

     the borrower, or any related person, are, for the duration of the buy-to-let mortgage contract, prevented from occupying any part of the land which is used, or is intended to be used, as a dwelling;

• “buy-to-let property” means the land which is the security for a buy-to-let mortgage contract;

• “cost-benefit analysis” means—

  1. (a)

     an analysis of the costs (including the costs to business activity and the impact on economic growth) and the benefits of a direction given by the Financial Policy Committee under section 9H of the 1998 Act; and

  2. (b)

     where those costs and benefits can reasonably be estimated and it is reasonably practicable to produce an estimate, an estimate of those costs and benefits;

• “credit” includes a cash loan, and any other form of financial accommodation;

• “excluded buy-to-let mortgage contract” means a buy-to-let mortgage contract under which a borrower obtains credit from a lender in relation to land, on which there are no dwellings at the time the buy-to-let mortgage contract is entered into, with the intention, or principal intention, of constructing new buildings on that land which will be used as dwellings;

• “FCA” has the meaning given by section 1A of the Financial Services and Markets Act 2000^f1;

• “FSMA cost-benefit analysis” means—

  1. (a)

     an analysis of the costs (including the costs to business activity and the impact on economic growth) and the benefits of any change in rules made pursuant to Part 9A of the Financial Services and Markets Act 2000^f2; and

  2. (b)

     where those costs and benefits can reasonably be estimated, an estimate of those costs and benefits;

• “interest coverage ratio” means the ratio of the expected monthly rental income from a buy-to-let property to the monthly interest payments as estimated by the lender at the time of deciding to provide credit to the borrower;

• “lender” means a person providing credit by way of business;

• “loan-to-value percentage” means the total amount of credit outstanding on a buy-to-let property under all buy-to-let mortgage contracts expressed as a percentage of the total value of the buy-to-let property;

• “PRA” has the meaning given by section 2A of the Financial Services and Markets Act 2000^f3;

• “related person” means, in relation to a borrower or (in the case of credit provided to trustees) in relation to a beneficiary of the trust—

  1. (a)

     that person’s spouse or civil partner;

  2. (b)

     a person (whether or not of the opposite sex) whose relationship with that person has substantially the same characteristics of a relationship between husband and wife or between civil partners; or

  3. (c)

     that person’s parent, brother, sister, child, grandparent or grandchild;

• “relevant buy-to-let mortgage contracts” means all buy-to-let mortgage contracts, other than excluded buy-to-let mortgage contracts;

• “relevant regulated person” means a regulated person who enters into buy-to-let mortgage contracts.