BES for Barclays homes

BARCLAYS BANK is planning to place 150 to 200 of its repossessed homes in a business expansion scheme.

The houses and flats around the country will be sold to the scheme with a promise that Barclays will buy back the properties or the shares after five years to give investors a certain return.

The properties will come from Barclays' centralised mortgage lending arm, based in Leeds.

They will be parcelled into three separate companies, each with a maximum shareholding of pounds 5m - a total of pounds 15m. The pounds 1 shares will be bought back by Barclays Bank after five years for pounds 1.20. This will bring higher-rate tax payers a net return of 13.7 per cent after tax relief.

If the scheme - known as Bessa, Business Expansion Secure Share Account - had been completed before yesterday, the property transfers would have escaped stamp duty and the return to investors would have been even higher.

The issue is being sponsored by Close Brothers and will be launched at the weekend. It will not be marketed through Barclays branches. If the property market should recover so that the shares could be sold for more than pounds 1.20 after five years, the benefit will go to Barclays - not the investors, who will get their set return.

A previous pounds 10m deal involving properties from Hill Samuel did leave some upside for investors.

A spokesman for Barclays said most of the properties were voluntary repossessions.

Barclays has repossessed 200 properties in the past six months. Some will need money spent on them. They will have to be valued at below pounds 85,000, or pounds 125,000 in London, after any repair costs, to qualify for inclusion in a BES.