Significant portion of total contracts

For the purpose of Article 126a(2)(a) of the CRR, the legally binding pre-sale and sale contracts and the legally binding pre-lease and lease contracts should be considered as amounting to a significant portion of total contracts where they represent a percentage equal to or higher than 50% of total contracts. That percentage should be calculated in accordance with paragraphs 14 to 16 of these Guidelines.

For pre-sale and sale contracts, the percentage referred to in paragraph 13 should be calculated as follows:

• a. In the numerator, the sum of the sale prices as specified in the following contracts related to the residential property:
• i. the legally binding pre-sale contracts with substantial cash deposit or financing ensured in an equivalent manner in accordance with paragraphs 10 and 12 of these Guideline s ;

and

• ii. the legally binding sale contracts;
• b. In the denominator, the total amount of the credit facility, including the drawn amount and undrawn amount, granted by the institution to the obligor to finance the ADC project related to the residential property.

In the event that the ADC project related to the residential property is financed through a syndicated loan or multiple loans, the institution should consider in the denominator under paragraph 14.b the sum of all loans and credit facilities provided by all institutions to finance the ADC project. For the purposes of calculating the ratio referred to in paragraph 14, in the case where a single credit facility finances a property whose intended use is partly for sale and partly for lease, the denominator must only reflect the portion of the credit facility that finances the construction intended for sale.

For pre-lease and lease contracts, the percentage referred to in paragraph 13 should be calculated as follows:

• a. In the numerator, the sum of:

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• i. the number of legally binding pre-lease contracts with substantial cash deposit or financing ensured in an equivalent manner in accordance with paragraphs 11 and 12 of these Guideline s ;

and

• ii. the number of legally binding lease contracts;
• b. In the denominator, the total number of units that are part of the ADC project related to the residential property.

Where the intended use of the property is partly for sale and partly for lease, the institution shall calculate separate ratios, in accordance with paragraphs 14 and 15 for pre-sale and sale contracts and with paragraph 16 for pre-lease and lease contracts. The portion of total contracts should be deemed significant where each of the two ratios complies with the minimum ratio set out in paragraph 13 of these Guidelines.

Where the intended use of the property is partly for sale and partly for lease and where the institution grants separate facilities for the sales part and for the lease part, the ADC preferential risk-weight can be applied at facility level provided it can be ensured that the repayment of the sales facility (respectively leases facility) is only based on the sales (respectively leases) of the units. For this purpose, the institution shall calculate two separate ratios at facility level for the assessment of significant portion of total contracts.

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