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Housing Act 1964

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This is the original version (as it was originally enacted).

8Building society advances to housing societies to which Corporation have made loans

(1)An advance to which this section applies is one made by a building society to a housing society on the security of any freehold or leasehold estate by means of a mortgage where—

(a)immediately before the execution of that mortgage, the Corporation have an interest in the same freehold or leasehold estate under a mortgage entered into by the housing society; and

(b)the security represented by the last-mentioned mortgage is, with the agreement of the Corporation, postponed to the building society's security under the first-mentioned mortgage.

(2)The following advances, that is to say—

(a)any advance to which this section applies, and

(b)any advance which, in accordance with section 21(7) of the Building Societies Act 1962, a building society is treated as having made by reason of a transfer—

(i)from one housing society to another, or

(ii)from a housing society to the Corporation,

or

(iii)from the Corporation to a housing society, of the mortgagor's interest under a mortgage securing an advance made by that building society,

shall not constitute special advances as defined by section 21 of the Building Societies Act 1962 and shall not be brought into account under section 22(2)(b) of that Act (under which the amount of the special advances which a building society may make depends on the amount lent by it to bodies corporate and to persons borrowing more than five thousand pounds or such higher amount as may be prescribed).

(3)Subject to this section a building society shall not in any financial year make advances to which this section applies of a total amount which exceeds fifteen per cent. of the total of the advances of all descriptions made by the building society in the last preceding financial year on the security of freehold or leasehold estate; and for the purpose of ascertaining that total the said section 21(7) of the Building Societies Act 1962 shall apply.

(4)The Chief Registrar may if he thinks fit grant to a building society permission in writing to make advances to which this section applies in excess of the limit imposed by the last foregoing subsection, but subject to such other limit under that subsection as may be specified in the permission for that purpose; and this section shall have effect accordingly.

(5)A building society shall have power to make an advance to which this section applies by means of a mortgage under which the same freehold or leasehold estate constitutes the security both for that advance and for advances made to the same housing society by one or more other persons by means of the same mortgage if, and only if, every other person making an advance by means of that mortgage is another building society and the mortgagees in the mortgage all covenant with each other not to transfer their interests as mortgagees to any person who is not a building society.

(6)At any time not more than three years after the coming into force of this Part of this Act the board of directors of a building society may by memorandum in writing alter the rules of the building society so as to enable the building society to make advances to which this section applies by means of mortgages of the kind described in the last foregoing subsection. The power of altering rules conferred on the directors of a building society by this subsection shall cease to have effect at the expiration of the period of three years beginning with the coming into force of this section, and any alteration of a building society's rules under this subsection shall cease to have effect on the first subsequent occasion (whether before or after the expiration of the said period of three years) on which an alteration of the rules of the building society made under section 17 of the Building Societies Act 1962 takes effect.

(7)Where any alteration of the rules of a building society is effected under the last foregoing subsection, the building society shall send notice of the alteration to the Chief Registrar ; and section 123(1) of the Building Societies Act 1962 (regulations as to form of notices) shall apply in relation to any such notice as it applies to notices sent to the Chief Registrar under that Act.

(8)If a building society does not comply with the requirements of subsection (3) of this section, the society shall be liable on conviction on indictment or on summary conviction to a fine which, on summary conviction, shall not exceed two hundred pounds; and every officer of the society who knowingly or wilfully authorises or permits the failure to comply shall be liable—

(a)on conviction on indictment, to a fine, or to imprisonment for a term not exceeding two years, or to both, or

(b)on summary conviction, to a fine not exceeding two hundred pounds, or to imprisonment for a term not exceeding three months, or to both.

(9)If a building society fails to comply with subsection (7) of this section, the society, and every officer of the society who is in default, shall be liable on summary conviction to a fine not exceeding two hundred pounds.

(10)In this section " financial year " has the meaning given by section 128 of, and paragraph 11 of Schedule 8 to, the Building Societies Act 1962, but for the purposes of subsection (3) of this section if the year to which that subsection applies is shorter or longer than the last preceding financial year a corresponding reduction or increase shall be made in the figure of fifteen per cent. mentioned in that subsection; and if the year is the first year in which the building society has made any advances on the security of freehold or leasehold estate, no advances to housing societies shall be permitted under that subsection in that year.

(11)In this section the expressions " building society ", " Chief Registrar " director " and " officer " have the meanings given by section 129 of the Building Societies Act 1962.

(12)In the application of this section to Scotland—

(a)for the references to freehold or leasehold estate there shall be substituted references to an estate or interest - in land;

(b)any reference to an advance on the security of freehold or leasehold estate, or to an advance by means of a mortgage, or other the like reference, shall be construed as a reference to an advance upon a heritable security.

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