Property authorised investment funds (Property AIFs): introduction and conditions of membership for the regime: the loan creditor condition
This condition (69M SI 2006/964) restricts the way in which a Property AIF can borrow money. The purpose is to prevent income or capital growth being extracted from the Property AIF via a profit-related loan. The Property AIF will be in breach of this condition if it is the debtor in a loan which is not a normal commercial loan.
The wording in the legislation is similar to the definition of ‘normal commercial loan’ in paragraph 1(5) Schedule 18 ICTA. For guidance on interpretation of ‘normal commercial loan’ as defined in Schedule 18 ICTA, see CTM81010 andCTM81020.