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FOR THE USE OF MORTGAGE INTERMEDIARIES & OTHER PROFESSIONALS ONLY
Sub sales and back-to-back transactions
Sub-sales and back-to-back transactions are not acceptable.
A sub-sale occurs when a property is bought and then sold on within 6 months. Date of registration at the Land Registry is how we determine the length of ownership.
This means that the current vendor must have owned the property for at least six months before we can accept an application to purchase that property, unless the property has been inherited.
A back-to-back transaction is a type of sub-sale where the intervening seller buys from the original seller and sells on to the borrower on the same day or within a few days. We also regard as sub-sales, cases where the seller acquires the freehold (or superior leasehold) title to the property, which they then immediately sell on to the borrower by the grant to them of a lease (or sub-lease).
The following cases are exceptions where it is acceptable for the property to be sold on within six months of acquisition by the seller.
Where sales are by:
A personal representative of the registered proprietor; or
An institutional mortgagee exercising its power of sale; or
A receiver, trustee-in-bankruptcy or liquidator; or
A registered housing provider (Housing Association) exercising a power of sale; or
A developer or builder selling a property acquired under a part-exchange scheme.
Applications which involve assignable contracts or irrevocable powers of attorney in favour of intervening sellers are not acceptable. Any other structure to the transaction which has a similar effect should be reported to us.