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Approved foreign ownership of restricted property is for owner-occupation

A worked RES examination question on foreign ownership, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.

Paper 1Lesson 1Foreign ownershipFree — no sign-up

The question

A foreign investor has been approved to buy a landed house on the mainland. He intends to let it out to tenants for the rental income while he lives abroad, treating it as an investment like any other.

Which statement is correct?

  1. A. He may let it out, an approved owner being free to deal with the property as he likes.
  2. B. He may let it out provided he first tells the approving authority of it in writing.
  3. C. He may not let it out; approved foreign ownership is for owner-occupation.
  4. D. He may let it out for up to three years, but not on a longer tenancy than that.

The answer, and why

Answer: C

The rule. Approved foreign ownership of restricted property is for owner-occupation. The owner may not let it out for investment income.

Why C is correct. He may not let it out; the approval is for owner-occupation.

The other options.

  • A treats approval as freeing him to deal as he likes.
  • B offers notification as a cure.
  • D allows a short tenancy the rule does not permit.

Exam note. Owner-occupation is a condition of the approval, not a suggestion. A restricted property approved to a foreigner cannot be rented out.

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