Ijara mortgages

5.1 The PRA considers an Ijara mortgage to be an example of an exposure to a tenant under a property leasing transaction concerning residential real estate exposures under which the firm is the lessor and the tenant has an option to purchase.

5.2 Accordingly, the PRA expects exposures to Ijara mortgages to be subject to all of the requirements applicable to residential real estate exposures, including in respect of property revaluation. [Article 124D of the Credit Risk: Standardised Approach (CRR) Part]

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Retirement interest-only (RIO) mortgages

Material previously in this section is now covered in Chapters 3 and 5 of SS3/24 - Definition of default.

Definition of residential real estate

5.9 The PRA expects firms to have a clear documented policy for determining the predominant nature of a property for the purpose of applying the definition of residential real estate set out in Rule 1.2 of the Credit Risk: Standardised Approach (CRR) Part.

5.10 The PRA considers it unlikely that care homes, purpose-built student accommodation and holiday lets would meet the definition of residential real estate set out in Rule 1.2 of the Credit Risk: Standardised Approach (CRR) Part unless the collateral is capable of being resold as a standard residential dwelling in the event of the borrower's default. The PRA expects that property subject to any usage restrictions that would prevent it from being occupied as a residential dwelling on a permanent and continuous basis would not meet the definition of residential real estate.