Local Government, Planning and Land Act 1980

160 Loans for building

(1) For the purpose of enabling any person to whom an urban development corporation has sold or let any land to erect a building on the land, the corporation may, subject to this section, lend money to that person.

(2) A loan made under this section, together with interest on the loan, shall be secured by a mortgage of the land (or in Scotland a standard security over the land) in respect of which the loan is made.

(3) The amount of the principal of a loan made under this section shall not exceed whichever of the following is less: —

(a) three quarters of the value of the mortgaged security (or in Scotland the security subjects) at the time the loan is made;

(b) one half of the value which it is estimated the mortgaged security (or in Scotland the security subjects) will bear when the building for the erection of which the loan is made has been erected.

(4) A loan made under this section shall carry interest at such rate as may be specified by the Treasury.

(5) The mortgage deed (or in Scotland standard security) securing a loan made under this section shall provide—

(a) for repayment being made, subject to paragraphs (c) and (d) below, within such period, not exceeding 30 years, as may be specified in the deed (or standard security);

(b) for repayment being made, subject to paragraphs (c) and (d) below, either by instalments of principal or by an annuity of principal and interest combined ;

(c) that, in the event of any of the conditions subject to which the loan is made not being complied with, the balance for the time being unpaid shall become repayable on demand by the corporation;

(d) that the said balance, or such part of it as may be provided for in the mortgage (or standard security), may, in any event other than that specified in paragraph (c) above, be repaid on any such conditions as may be specified in the mortgage (or standard security) after one month's written notice of intention to repay has been given to the corporation ;

(e) where repayment is to be made by an annuity of principal and interest combined, for determining the amount by which the annuity or the life of the annuity is to be reduced when a part of the loan is paid off otherwise than by way of an instalment of the annuity.