Building Societies Act 1960
| Jurisdiction | UK Non-devolved |
| Citation | 1960 c. 64 |
Building Societies Act , 1960
(8 & 9 Eliz. 2) CHAPTER 64
An Act to amend the law relating to building societies.
Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Advances on mortgage to companies, etc.
1 Restrictions on certain types of advances.
(1) In this section the expression ‘special advance’ means an advance made by a building society on the security of freehold or leasehold estate, being—
(a ) an advance of any amount to a body corporate, or
(b ) an advance of a sum exceeding five thousand pounds, or such other sum as may be prescribed under this section, to a person other than a body corporate, or
(c ) an advance of any amount to a person other than a body corporate, being a person who is, after the advance is made to him, indebted to the building society (taking into account the advance in question and all other debts of any description, whether immediately repayable or not) in an amount exceeding five thousand pounds, or such other sum as may be prescribed under this section.
For the purposes of paragraph (c ) of this subsection, the amount in which a person is indebted to the building society shall be ascertained both immediately after the making of the advance and also at the end of a period of three months beginning with the date of the advance or (if sooner) at the end of the financial year in which the advance was made; and that paragraph shall not apply to an advance to any person so as to make it a special advance unless either the amount so ascertained on the first occasion exceeded ten thousand pounds (or, in a year for which references in this subsection to five thousand pounds are to be taken as references to a sum prescribed under this section, twice the amount of that sum) or the amount so ascertained on the second occasion exceeded five thousand pounds (or such other sum as may be prescribed under this section).
(2) A building society shall so conduct its business as to secure that special advances are not made by it except as authorised by this section.
(3) At the end of each financial year a building society shall review the advances made by the building society on the security of freehold or leasehold estate which are outstanding at the end of that year and shall ascertain—
(a ) the total amount of those advances which at that time has not been repaid to the building society, together with any arrears of interest in respect of those advances, and
(b ) the proportion of that amount which is in respect of advances either to any body corporate or to a person who at that time is indebted to the building society (taking into account any kind of debts, whether immediately repayable or not) in an amount exceeding five thousand pounds, or such other sum as may be prescribed under this section.
(4) Subject to the provisions of section two of this Act, if the said proportion does not exceed ten per cent. the building society may make special advances in the financial year following that for which the proportion was ascertained but so that the total amount of those advances made in that following financial year does not exceed ten per cent. of the total amount of all advances made by the building society on the security of freehold or leasehold estate during that following financial year.
(5) Subject to the provisions of section two of this Act, if the said proportion exceeds ten per cent., but does not exceed twenty-five per cent., the building society may make special advances in the financial year following that for which the proportion was ascertained but so that the total amount of those advances made in that following financial year does not exceed two and one-half per cent. of the total amount of all advances made by the building society on the security of freehold or leasehold estate in that following financial year.
(6) Subject to the provisions of section two of this Act, if the said proportion exceeds twenty-five per cent. the building society may not make any special advances in the financial year following that for which the proportion was ascertained, and may not make in that year any advances as respects which it cannot be ascertained at the time they are made whether they will be special advances or not.
(7) Notwithstanding anything in subsection (4) or subsection (5) of this section, a building society which is established after the commencement of this Act shall not make any special advances in the calendar year in which it is established, and shall not make in that year any advances as respects which it cannot be ascertained at the time they are made whether they will be special advances or not.
(8) The Chief Registrar may by an order made with the consent of the Treasury and contained in a statutory instrument prescribe that, in relation to advances made by building societies in any financial year beginning on or after the date of the coming into operation of the order, for the references in subsection (1) and subsection (3) of this section to a sum of five thousand pounds there shall be substituted references to such greater sum as may be specified in the order, and the power of making orders under this subsection shall include power to vary or revoke any previous order.
An order shall not be made under this subsection unless a draft of the order has been approved by a resolution of each House of Parliament.
(9) If a building society does not comply with the requirements of this section, the building 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 building society who is in default shall be liable—
(a ) on conviction on indictment to a fine or to imprisonment for a term not exceeding two years, or to both, and
(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.
(10) Without prejudice to the provisions of the last foregoing subsection, if a building society does not comply with the requirements of this section the Chief Registrar may present a petition for the winding up of the building society under the Companies Act, 1948.
(11) For the purposes of this section any transaction to which a building society is a party whereby the mortgagor's interest under a mortgage securing an advance made by the building society is, subject to the mortgage, transferred from one person to another shall be treated as an advance made by the building society to that other person of an amount equal to the amount of the mortgage debt remaining unpaid immediately after the transfer, together with any arrears of interest then outstanding.
(12) For the purposes of the application of this section to any advance made jointly to two or more persons, the expression ‘special advance’ shall include such an advance if it would include an advance of like amount made under the like conditions to any one of those persons and paragraph (b ) of subsection (3) of this section shall apply to such an advance if that paragraph would apply to an advance of like amount made under the like conditions to any of those persons.
(13) The restrictions imposed by this section shall come into force as respects any building society established before the commencement of this Act so as to restrict special advances made in the first financial year beginning after the commencement of this Act.
2 Exemptions from restrictions on special advances.
(1) If a building society in any financial year in which it may make special advances up to the limit specified in subsection (4) of section one of this Act, or up to the limit specified in subsection (5) of section one of this Act, makes or proposes to make special advances as defined in that section on the security of freehold or leasehold property which consists wholly or mainly of dwelling-houses or flats which it is proposed to construct, or which are in course of construction or have recently been constructed, and on an application to the Chief Registrar shows to his satisfaction that the dwelling-houses or flats are being or will be made available for renting by tenants, the Chief Registrar may, if he thinks fit, for the purpose of authorising the building society to exceed the said limit by an amount equal to the whole or some proportion of the amount of the advances in respect of which the application is made, grant to the building society permission in writing to make special advances in that financial year in excess of the said limit, but subject to such other limit under the said subsection (4) or the said subsection (5) as may be specified in the permission for that purpose, and section one of this Act shall have effect accordingly.
The limit specified in the permission may be expressed as a percentage of the total of all advances made by the building society in the year, or in any other manner.
(2) Where the proportion ascertained under paragraph (b ) of subsection (3) of section one of this Act as at the end of a financial year for a building society exceeds ten per cent. but does not exceed twenty-five per cent. (so that subsection (5) of that section applies in the following financial year) and the building society shows to the satisfaction of the Chief Registrar that that proportion represents in whole or in part advances in respect of which an application has at any time been made under the foregoing subsection and by reference to which permission was granted under that subsection, the Chief Registrar may,...
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