CoA clarifies regulated ‘sale and rent back’ agreement features

On 5 February 2025 the case of Priti Odhavji v Caroline Tighe, Suranjan (Joseph) Cooray, K & C Properties Limited [2025] EWHC 372 (Ch), 2025 WL 00581905 came before the Court of Appeal, Chancery division. In the course of the appeal, the court clarified certain features required to be present for their to be a regulated sale and rent back agreement for the purposes of article 63J of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

In particular:

• the ‘sale’ and ‘rent’ elements of an agreement need not be set out in the same document but they must be entered into at the same time; and
• the purchaser and the lessor under the agreement must be one and the same.

In the present case, the CoA found that (i) the sale itself was expressed to be on condition of vacant possession (therefore, expressly prohibiting continued occupation by the seller) and (ii) the documentation purporting to permit the appellant to continue to occupy the property had been entered into with Mr Cooray prior to the sale contract with Ms Tighe and the two documents made no reference to each other. As a consequence, the arrangements did not amount to a regulated sale and rent back agreement.