Exhibit
  10.19

HOLMES FINANCING (NO.7) PLC

REPORT AND ACCOUNTS

FOR THE YEAR ENDED 31 DECEMBER 2005

Registered
  in England and Wales No. 4645659

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Holmes Financing
  (No. 7) plc



Report of the directors

The Directors submit their report together with the accounts for the year ended 31 December 2005.

The principal activity of the Company is to issue asset backed notes and enter into all financial arrangements in that connection.

No future changes in activity are envisaged.

Dividend

The loss for the year on ordinary activities after tax amounted to £281,000 (2004: £nil).

The Directors do not recommend the payment of a dividend (2004: £nil).

The Companys financial instruments, other than derivatives, comprise loans to group undertakings, borrowings, cash and liquid resources, and various items, such as debtors and creditors that
arise directly from its operations. The main purpose of these financial instruments is to raise finance for the Companys operations.

The Company also enters into derivatives transactions (principally cross currency swaps). The purpose of such transactions is to manage the currency risks arising from the Companys
operations and its sources of finance.

It is, and has been throughout the year under review, the Companys policy that no trading in financial instruments shall be undertaken.

The main risk arising from the Companys financial instruments is currency risk. The Company has debt securities in issue denominated in US Dollars and Euros. The Board reviews and agrees
policies for managing this risk. The Companys policy is to eliminate all exposures arising from movements in exchange rates by the use of cross currency swaps to hedge payments of interest and principal on the securities.

All other assets, liabilities and transactions are denominated in Sterling.

Further disclosures regarding financial risk management objectives and policies and the companys exposure to principal risks can be found in note 1.

Directors and their interests

The Directors who served throughout the year were:

Mr D M Green
Mr M McDermottWilmigton Trust SP Services (London) Limited (formerly SPV Management Limited)

At the year end and the previous year end, Holmes Holdings Limited and Mr M McDermott jointly held one share in the Company.

Wilmington Trust SP Services (London) Limited and Mr M McDermott jointly held one share in the holding company, Holmes Holdings Limited, at the year end. The other share in Holmes Holdings Limited
was held by Wilmington Trust SP Services (London) Limited. Mr M McDermott is also a Director of Wilmington Trust SP Services (London) Limited.

None of the other Directors had a beneficial interest in the shares of the Company, or of the holding company, Holmes Holdings Limited and its subsidiaries, at the year end.

The directors are responsible for preparing their report and financial statements. The directors have chosen to prepare accounts for the company in accordance with International Financial
Reporting Standards (IFRSs). Company law requires the directors to prepare such financial statements in accordance with International Financial Reporting Standards, the Companies Act 1985 and Article 4 of the IAS Regulation.

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Holmes Financing
  (No. 7) plc



Directors responsibility
statement – continued

International Accounting Standard 1 requires that financial statements present fairly for each financial year the companys financial position, financial performance and cash flows. This
requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting
Standards Boards Framework for the preparation and Presentation of Financial Statements.

In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting Standards. Directors are also required to:

|• | properly select and apply accounting policies;                                                                                                                                                                                                                                                                 
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;                                                                                                                                                                   
|• | provide additional disclosures when compliance with the specific requirements in International Financial Reporting Standards is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the entitys financial position and financial performance; and
|• | prepare the accounts on a going concern basis unless, having assessed the ability of the company to continue as a going concern, management either intends to liquidate the entity or to cease
trading, or have no realistic alternative but to do so.                                                         

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company, for safeguarding the assets, for
taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of a directors report which complies with the requirements of the Companies Act 1985.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.

The Directors confirm that they are satisfied that Holmes Financing (No.7) plc has adequate resources to continue in business for the foreseeable future. For this reason, they continue to adopt a
going concern basis in preparing the financial statements.

At the forthcoming Annual General Meeting of the Company it will be proposed that Deloitte & Touche LLP be re-appointed as auditors of the Company, in accordance with the resolution by Abbey
National plc to appoint Deloitte & Touche LLP as auditors of Abbey National plc and its subsidiaries.

By Order of the Board



For and on behalf ofAbbey National Secretariat Services Limited, Secretary

24 February 2006

Abbey National House, 2 Triton Square, Regent’s Place, London NW1 3AN

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Holmes Financing
  (No. 7) plc



Independent auditors report to the members of Holmes Financing (No. 7) PLC

We have audited the individual company financial statements (the financial statements) of Holmes Financing (No. 7) PLC for the year ended 31 December 2005, which comprise the income
statement, the balance sheet, the cash flow statement and the related notes 1 to 20. These financial statements have been prepared under the accounting policies set out therein.

The directors responsibilities for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and International Financial Reporting Standards
(IFRSs) as adopted for use in the European Union are set out in the statement of directors' responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatory requirements, International Standards on Auditing (UK and Ireland) and the
Listing Rules of the Financial Services Authority.

We report to you our opinion as to whether the financial statements give a true and fair view in accordance with the relevant framework and are properly prepared in accordance with the Companies
Act 1985 and Article 4 of the IAS Regulation. We also report to you if, in our opinion, the directors report is not consistent with the financial statements, if the company has not kept proper accounting records, if we have not received all
the information and explanations we require for our audit, or if information specified by law or the Listing Rules regarding directors remuneration and transactions with the company and other members of the group is not disclosed.

We read other information contained in the directors report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the
financial statements.

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the financial statements, and of whether the accounting
policies are appropriate to the circumstances of the company consistently applied and adequately disclosed.

We planned and performed our audit
so as to obtain all the information and explanations which we considered necessary
in order to provide us with sufficient evidence to give reasonable assurance
 that the financial statements are free from material misstatement, whether caused
by fraud or other irregularity or error. In forming our opinion we also evaluated
the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

| | • | the financial statements
        give a true and fair view in accordance with those IFRSs as adopted for
        use in the European Union,
        of the state of the companys affairs as at 31 December 2005 and of its
    loss for the year then ended; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                  
| | • | the financial statements
    have been properly prepared in accordance with the Companies Act 1985.                                                                                                                                                              



Deloitte & Touche LLPChartered Accountants and Registered AuditorsLondon

24 February 2006

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Holmes Financing
  (No. 7) plc



Income StatementFor the Year ended 31 December 2005

|                                                      |       |  | Year ended       |   | Year ended       |  
|----------------------------------------------------- | ----- |  | ---------------- | - | ---------------- | -
|                                                      | Notes |  | 31 December 2005 |   | 31 December 2004 |  
|                                                      |       |  | £000             |   | £000             |  
|                                                      |       |  |                  |   |                  |  
|Interest and similar income                           | 3     |  | 94,590           |   | 93,825           |  
|Interest expense and similar charges                  | 4     |  | (94,590          | ) | (93,825          | )
|                                                      |       |  |                  |   |                  |  
|Net Interest Income                                   |       |  |                 |   |                 |  
|Other operating expenses                              | 6     |  | (402             | ) |                 |  
|                                                      |       |  |                  |   |                  |  
|Loss before tax                                       |       |  | (402             | ) |                  |  
|Tax                                                   | 7     |  | 121              |   |                 |  
|                                                      |       |  |                  |   |                  |  
|Net loss attributable to equity holders of the parent | 15    |  | (281             | ) |                 |  
|                                                      |       |  |                  |   |                  |  

The Company has no recognised income or expenses other than the loss for the current and result for the previous year as set out above. Accordingly no separate statement of recognised income and
expense is presented.

All of the operations of the Company are classed as continuing in the current and prior years.

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Holmes Financing
  (No. 7) PLC



Balance SheetAs at 31 December 2005

|                                            |       |  | 31
      December 2005 |   | 31
      December 2004 |  
|------------------------------------------- | ----- |  | ---------------------- | - | ---------------------- | -
|                                            | Notes |  | £000                   |   | £000                   |  
|                                            |       |  |                        |   |                        |  
|Loans
      and advances to group companies | 8     |  | 1,882,160              |   | 1,882,160              |  
|Other
      assets                          | 10    |  | 18,982                 |   | 20,746                 |  
|Cash
      and cash equivalents             |       |  | 14                     |   | 13                     |  
|Deferred
      tax assets                   | 11    |  | 121                    |   | –                      |  
|                                            |       |  |                        |   |                        |  
|Total
      assets                          |       |  | 1,901,277              |   | 1,902,919              |  
|                                            |       |  |                        |   |                        |  
|Derivative
      financial instruments      | 9     |  | (112,551               | ) | –                      |  
|Debt
      securities in issue              | 12    |  | (1,770,012             | ) | (1,882,160             | )
|Other
      liabilities                     | 13    |  | (18,945                | ) | (20,709                | )
|                                            |       |  |                        |   |                        |  
|Total
      Liabilities                     |       |  | (1,901,508             | ) | (1,902,869             | )
|                                            |       |  |                        |   |                        |  
|Equity                                      |       |  |                        |   |                        |  
|Share
      capital                         | 14    |  | (50                    | ) | (50                    | )
|Retained
      losses                       | 15    |  | 281                    |   | –                      |  
|                                            |       |  |                        |   |                        |  
|Total
      liabilities and equity          |       |  | (1,901,277             | ) | (1,902,919             | )
|                                            |       |  |                        |   |                        |  

The financialstatements were approved by the board of directors
and authorised for issue on 24 February 2006. They were signed on its behalf by:



M McDermottDirector

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Holmes Financing
  (No. 7) PLC



Cash Flow StatementFor the Year ended 31 December 2005

|                                                     |       |  | Year
      ended 31 |  | Year
      ended 31 |  
|---------------------------------------------------- | ----- |  | ------------------- |  | ------------------- | -
|                                                     |       |  | December
      2005 |  | December
      2004 |  
|                                                     | Notes |  | £000                |  | £000                |  
|                                                     |       |  |                     |  |                     |  
|Net
      cash from operating activities             | 16    |  | 1                   |  | –                   |  
|                                                     |       |  |                     |  |                     |  
|Investing
      activities                           |       |  |                     |  |                     |  
|Repayment
      of loans to group companies          |       |  | –                   |  | 521,390             |  
|                                                     |       |  |                     |  |                     |  
|Net
      cash from investing activities             |       |  |                     |  | 521,390             |  
|                                                     |       |  |                     |  |                     |  
|                                                     |       |  |                     |  |                     |  
|Financing
      activities                           |       |  |                     |  |                     |  
|Repayment
      of debt securities in issue          |       |  | –                   |  | (521,390            | )
|                                                     |       |  |                     |  |                     |  
|Net
      cash used in financing activities          |       |  | –                   |  | (521,390            | )
|                                                     |       |  |                     |  |                     |  
|                                                     |       |  |                     |  |                     |  
|Net
      increase in cash and cash equivalents      |       |  | 1                   |  | –                   |  
|Cash
      and cash equivalents at beginning of year |       |  | 13                  |  | 13                  |  
|Effect
      of foreign exchange rate changes        |       |  | –                   |  | –                   |  
|                                                     |       |  |                     |  |                     |  
|Cash
      and cash equivalents at end of year       |       |  | 14                  |  | 13                  |  
|                                                     |       |  |                     |  |                     |  
|                                                     |       |  |                     |  |                     |  

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Holmes Financing
  (No. 7) PLC

Notes to the Financial Statements for the year ended 31 December 2005



1. Accounting policies

Adoption of International Accounting Standards

The financial statements have
for the first time, been prepared in accordance with International Financial
Reporting Standards (IFRS) adopted by the International Accounting
Standards
Board (IASB), and interpretations issued by the International Financial
Reporting Interpretations Committee of the IASB. The date of transition to IFRS
for the Company and the date of its opening IFRS balance sheet was 1 January
2004.

The Company has chosen to adopt IFRS 7 Financial Instruments: Disclosure for this financial year, earlier than is required by the IASB.

As allowed by First time adoption of international financial reporting standards (IFRS 1), and Financial Instruments: Disclosure (IFRS 7) the Company has not restated its
2004 income statements and balance sheets to comply with IAS 32, IAS 39 and IFRS 7. The impact of this is that the Companys derivatives will not be held at fair value in the comparative income statement and balance sheet and the valuation
adjustment to the nominal value of the debt securities in issue that qualify as hedging instruments will not be included in the comparative income statement and balance sheet.

The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all years presented, unless other otherwise
stated.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention,
as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities held at fair value through profit or loss and all derivative contracts.

The financial statements have also been prepared in accordance with IFRSs adopted for use in the European Union and therefore comply with Article 4 of the EU IAS regulation.

Due to the nature of the business the Directors are of the opinion that it is more appropriate to use net interest income rather than turnover in presenting the income statement.

Foreign currency translation

Items included in the financial statements of the entity are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that
entity (the measurement currency). The financial statements are presented in Pounds Sterling.

Foreign currency transactions are translated into the measurement currency at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Interest income and expense

Interest income and expense is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that assets net carrying amount.

Offsetting financial instruments

Financial assets and liabilities including derivatives are offset and the netamount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the
liability simultaneously.

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Holmes Financing
  (No. 7) PLC

Notes to the Financial Statements for the year ended 31 December 2005



Derivative financial instruments and hedge accounting

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. Fair values are obtained from
quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models as appropriate. All derivatives are carried as assets when fair value is positive
and as liabilities when fair value is negative.

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The entity
designates all its derivatives as hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge). Hedge accounting is used for derivatives designated in this way provided certain criteria are met.

The entity documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking
various hedge transactions.  The entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or
cash flows of hedged items.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset
or liability that are attributable to the hedged risk. Any hedge ineffectiveness is shown in other operating expenses.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of the hedged item for which the effective interest method is used is amortised to profit or
loss over the period to maturity. The adjustment to the carrying amount of a hedged equity security remains in retained earnings until the disposal of the equity security.

Income taxes, including deferred income taxes

Income tax payable on profits, based on the applicable tax law in each jurisdiction is recognised as an expense in the period in which profits arise. The tax effects of income tax losses available
to carry forward are recognised as an asset when it is probable that future taxable profits will be available, against which these losses can be utilised.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Currently enacted tax rates are used in the determination of deferred income tax.

Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting group and where there is both the legal right and the intention to settle on a net basis
or to realise the asset and settle the liability simultaneously.

Financial assets

The entity classifies its financial assets as loans and receivables which are held at amortised cost. These includes loans and advances to group companies shown on the face of the balance sheet,
accrued interest receivable shown within other assets.and cash and cash equivalents shown on the face of the balance sheet. Derivatives are classified as fair value and are shown on the face of the balance sheet.

Cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months maturity
from the date of acquisition, including cash and non restricted balances with
central banks, treasury bills and other eligible bills, loans and advances to
banks, amounts due from other banks and short term investments in securities.

Financial Liabilities

Financial liabilities are measured at amortised cost, which includes a valuation adjustment for debt securities designated as hedging instruments. These include debt securities in issue shown on
the face of the balance sheet, and accrued interest shown within other liabilities.

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Holmes Financing
  (No. 7) PLC

Notes to the Financial Statements for the year ended 31 December 2005



Financial Risk factors

The companys activities expose it to a variety of financial risks including currency risk, fair value interest rate risk and liquidity risk. The companys overall risk management
programmed focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the companys financial performance. The company uses derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by the central risk management function of the Abbey Group.  Authority flows from the Abbey National plc Board of Directors to the Chief Executive Office and from
him to his direct reports. Delegation of authority is to individuals.  Formal standing committees are maintained for effective management or oversight.  Their authority is derived from the person they are intended to assist.

Currency Risk

The main operating (or functional) currencies of its operations are sterling, euros and US dollars.  As the Company prepares its financial statements in sterling, these will be
affected by movements in the euro/sterling and US dollar/sterling exchange rates. The exposure to this risk is mitigated by the use of cross currency derivatives. Taking this into account, the Company did not have a material financial exposure to
foreign exchange gains and losses in either of the years to 31 December 2005 or 31 December 2004.

Included in the table below are the Companys assets and liabilities at carrying amounts classified by currency.

|                                      | Euro     |   | US Dollars |   | Sterling |   | Total      |  
|------------------------------------- | -------- | - | ---------- | - | -------- | - | ---------- | -
|                                      |          |   |            |   |          |   |            |  
|Loans and advances to group companies | 407,750  |   | 1,189,410  |   | 285,000  |   | 1,882,160  |  
|Other assets                          |         |   |           |   | 18,982   |   | 18,982     |  
|Cash and cash equivalents             |         |   |           |   | 14       |   | 14         |  
|Tax assets                            |         |   |           |   | 121      |   | 121        |  
|                                      |          |   |            |   |          |   |            |  
|Total assets                          | 407,750  |   | 1,189,410  |   | 304,117  |   | 1,901,277  |  
|                                      |          |   |            |   |          |   |            |  
|Derivative financial instruments      | 2,222    |   | (114,773   | ) |         |   | (112,551   | )
|Debt securities in issue              | (410,074 | ) | (1,074,938 | ) | (285,000 | ) | (1,770,012 | )
|Other liabilities                     | (2,207   | ) | (11,354    | ) | (5,384   | ) | (18,945    | )
|                                      |          |   |            |   |          |   |            |  
|Total Liabilities                     | (410,059 | ) | (1,201,065 | ) | (290,384 | ) | (1,901,508 | )
|                                      |          |   |            |   |          |   |            |  

Cash flow and fair value interest rate risk

Interest rate repricing gap information is shown in the table below at 31 December 2005.  It provides an estimate of the repricing profile of the Companys assets, liabilities and other
off-balance sheet exposures.  For the major categories of assets and liabilities, the table shows the carrying values of interest earning assets and liabilities, which reprice within selected time banks. Items are allocated to time bands by
reference to the earlier of the next interest rate repricing date and the legal maturity date. This leads to an apparent timing mismatch where the anticipated maturity date is different from the legal maturity date and hedges have been structured
accordingly.  The tables do not purport to measure market risk exposure.

|                                      |            |   | Non-     |   |            |  
|------------------------------------- | ---------- | - | -------- | - | ---------- | -
|                                      | 1-3        |   | interest |   |            |  
|                                      | months     |   | bearing  |   | Total      |  
|                                      |            |   |          |   |            |  
|Loans and advances to group companies | 1,882,160  |   |         |   | 1,882,160  |  
|Other assets                          |           |   | 18,982   |   | 18,982     |  
|Cash and cash equivalents             | 14         |   |         |   | 14         |  
|Tax assets                            |           |   | 121      |   | 121        |  
|                                      |            |   |          |   |            |  
|Total assets                          | 1,882,174  |   | 19,103   |   | 1,901,277  |  
|                                      |            |   |          |   |            |  
|Derivative financial instruments      | (112,551   | ) |          |   | (112,551   | )
|Debt securities in issue              | (1,770,012 | ) |         |   | (1,770,012 | )
|Other liabilities                     |           |   | (18,945  | ) | (18,945    | )
|                                      |            |   |          |   |            |  
|Total Liabilities                     | (1,882,563 | ) | (18,945  | ) | (1,901,508 | )
|                                      |            |   |          |   |            |  

The table below summarises the effective interest rate by major currencies for monetary financial instruments:

|                                 | Euro |  | US Dollars |  | Sterling | 
|-------------------------------- | ---- |  | ---------- |  | -------- | 
|                                 |      |  |            |  |          | 
|Derivative financial instruments | 4.92 |  | 4.79       |  | 4.89     | 
|Debt securities in issue         | 2.63 |  | 4.37       |  | 4.89     | 

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Holmes Financing
  (No. 7) PLC

Notes to the Financial Statements for the year ended 31 December 2005



Interest rate sensitivity

As a result of the cross currency swaps the Companys total interest income and expenditure on financial assets and liabilities is based on the same rate of sterling LIBOR, it therefore has
no material sensitivity to changes in interest rates.

Liquidity risk

The table below analyses the
  Companys assets and liabilities into relevant maturity groupings based
  on the remaining period at balance sheet date to contractual maturity date:

|                                      | Up to 1 |  | 1-3    |  | 3-12   |  |           |   | Over 5     |   |            |  
|------------------------------------- | ------- |  | ------ |  | ------ |  | --------- | - | ---------- | - | ---------- | -
|                                      | month   |  | months |  | months |  | 1-5 years |   | years      |   | Total      |  
|                                      |         |  |        |  |        |  |           |   |            |   |            |  
|Loans and advances to group companies |        |  |       |  |       |  | 803,340   |   | 1,078,820  |   | 1,882,160  |  
|Other assets                          |        |  | 18,982 |  |       |  |          |   |           |   | 18,982     |  
|Cash and cash equivalents             |        |  | 14     |  |       |  |          |   |           |   | 14         |  
|Tax assets                            |        |  | 121    |  |       |  |          |   |           |   | 121        |  
|                                      |         |  |        |  |        |  |           |   |            |   |            |  
|Total assets                          |        |  | 19,117 |  |       |  | 803,340   |   | 1,078,820  |   | 1,901,277  |  
|                                      |         |  |        |  |        |  |           |   |            |   |            |  
|Derivative financial instruments      |         |  |        |  |        |  | (77,141   | ) | (35,410    | ) | (112,551   | )
|Debt securities in issue              |        |  |       |  |       |  | (726,061  | ) | (1,043,951 | ) | (1,770,012 | )
|Other liabilities                     |        |  |       |  |       |  |          |   | (18,945    | ) | (18,945    | )
|                                      |         |  |        |  |        |  |           |   |            |   |            |  
|Total Liabilities                     |        |  |       |  |       |  | (803,202  | ) | (1,098,306 | ) | (1,901,508 | )
|                                      |         |  |        |  |        |  |           |   |            |   |            |  
|Net liquidity gap                     |        |  | 19,117 |  |       |  | 138       |   | (19,486    | ) | (231       | )
|                                      |         |  |        |  |        |  |           |   |            |   |            |  

Credit risk

The maximum exposure to credit risk is the carrying amount of the Loans and advances to group companies of £2,077,278,000.

Accounting for derivative financial instruments and hedging activities

The Company holds derivatives as fair value hedges of the non-sterling debt securities in issue in order to hedge foreign currency and interest rate risk. These require the Company to pay a rate
based on three-month sterling LIBOR and receive US dollar LIBOR and EURIBOR receipts. These are initially recognised and subsequently re-measured at fair value.

Fair value estimation

Where quoted market prices are not available, a discounted cash flow model is used based on a current yield curve appropriate for the remaining term to maturity.

2. Business and geographical segments

All of the Companys income is derived from activities in the same business and geographical segment, within the UK. There were no discontinued operations during the period.

3. Interest and similar income

|                                         | Year ended  |  | Year ended  | 
|---------------------------------------- | ----------- |  | ----------- | 
|                                         | 31 December |  | 31 December | 
|                                         | 2005        |  | 2004        | 
|                                         | £000        |  | £000        | 
|                                         |             |  |             | 
|Interest receivable from group companies | 94,590      |  | 93,825      | 
|                                         |             |  |             | 

4. Interest expense and similar charges

|                                    | Year ended  |  | Year ended  | 
|----------------------------------- | ----------- |  | ----------- | 
|                                    | 31 December |  | 31 December | 
|                                    | 2005        |  | 2004        | 
|                                    | £000        |  | £000        | 
|                                    |             |  |             | 
|Interest payable on debt securities | 68,901      |  | 93,825      | 
|Swap interest payable               | 25,689      |  |            | 
|                                    |             |  |             | 
|                                    | 94,590      |  | 93,825      | 
|                                    |             |  |             | 

---



Holmes Financing
  (No. 7) PLC

Notes to the Financial
  Statements for the year ended 31 December 2005



5. Loss before tax

Loss before tax has been arrived
  at after (charging)/crediting:

|                                      | Year ended  |   | Year ended  | 
|------------------------------------- | ----------- | - | ----------- | 
|                                      | 31 December |   | 31 December | 
|                                      | 2005        |   | 2004        | 
|                                      | £000        |   | £000        | 
|                                      |             |   |             | 
|Net
      foreign exchange loss       | (144        | ) |            | 
|Net loss on
      hedging derivatives | (112,551    | ) |             | 
|Net
      gain on hedged item         | 112,293     |   |             | 
|                                      |             |   |             | 

Auditors remuneration for the current and previous financial years has been borne by Holmes Funding Limited, a fellow subsidiary undertaking.

No emoluments were paid to the Directors in the current or previous financial year.

The Company had no employees in the current or previous financial year.

6. Other operating
  expenses

|                                      | Year ended  |   | Year ended  | 
|------------------------------------- | ----------- | - | ----------- | 
|                                      | 31 December |   | 31 December | 
|                                      | 2005        |   | 2004        | 
|                                      | £
      000 |   | £000        | 
|                                      |             |   |             | 
|Net foreign
      exchange losses     | (144        | ) |            | 
|Net loss on
      hedging derivatives | (112,551    | ) |             | 
|Net gain on
      hedged item         | 112,293     |   |            | 
|                                      |             |   |             | 
|                                      | (402        | ) |            | 
|                                      |             |   |             | 

7. Tax

|                              | Year ended  |  | Year ended  | 
|----------------------------- | ----------- |  | ----------- | 
|                              | 31 December |  | 31 December | 
|                              | 2005        |  | 2004        | 
|                              | £000        |  | £000        | 
|                              |             |  |             | 
|Current tax:                  |             |  |             | 
|UK corporation
      tax      |            |  |            | 
|                              |             |  |             | 
|                              |            |  |            | 
|                              |             |  |             | 
|Deferred tax
      (note 12): |             |  |             | 
|Current year                  | 121         |  |            | 
|                              |             |  |             | 
|                              | 121         |  |            | 
|                              |             |  |             | 
|                              | 121         |  |            | 
|                              |             |  |             | 

Corporation tax is calculated at 30% (2004: 30%) of the estimated assessable loss for the year.

The charge for the year can be reconciled to the loss per the income statement as follows:

|                                                            |                       |  |                       | 
|----------------------------------------------------------- | --------------------- |  | --------------------- | 
|                                                            | Year ended
      2005 |  | Year ended
      2004 | 
|                                                            | £000                  |  | £000                  | 
|                                                            |                       |  |                       | 
|Loss before
      tax                                       | 402                   |  |                      | 
|                                                            |                       |  |                       | 
|Tax at the
      UK corporation tax rate of 30% (2004: 30%) | 121                   |  |                      | 
|                                                            |                       |  |                       | 
|Tax income
      for the year                               | 121                   |  |                      | 
|                                                            |                       |  |                       | 
|                                                            |                       |  |                       | 

---



Holmes Financing
  (No. 7) PLC

Notes to the Financial
  Statements for the year ended 31 December 2005



8. Loans and advances
  to group companies

|                           | 31 December    |  | 31 December | 
|-------------------------- | -------------- |  | ----------- | 
|                           | 2005           |  | 2004        | 
|                           | £000           |  | £000        | 
|                           |                |  |             | 
|Repayable:                 |                |  |             | 
|2
      to 5 years         | 803,
      340 |  | 803,340     | 
|Greater than
      5 years | 1,078,820      |  | 1,078,820   | 
|                           |                |  |             | 
|                           | 1,882,160      |  | 1,882,160   | 
|                           |                |  |             | 

The loans are all denominated in sterling and are at variable rates of interest, based on LIBOR for three-month sterling deposits.

The carrying amounts of loans and advances to group companies approximates to their fair value.

9. Derivative Financial
  Instruments

The Company holds derivatives as fair value hedges of the non-sterling debt securities in issue in order to hedge foreign currency and interest rate risk. These require the Company to pay a rate
based on three-month sterling LIBOR and receive US dollar LIBOR, EURIBOR and fixed rate receipts in Swiss Francs. These are initially recognised and subsequently remeasured at a fair value. The hedging relationship between the cross currency
derivatives and the debt securities in issue qualifies for a hedge accounting treatment of the liabilities.

10. Other assets

|                                                                     | 31 December |  | 31 December | 
|-------------------------------------------------------------------- | ----------- |  | ----------- | 
|                                                                     | 2005        |  | 2004        | 
|                                                                     | £000        |  | £000        | 
|                                                                     |             |  |             | 
|Called up share
      capital not paid  due from parent undertaking | 37          |  | 37          | 
|Accrued interest
      due from group companies                      | 18,945      |  | 20,709      | 
|                                                                     |             |  |             | 
|                                                                     | 18,982      |  | 20,746      | 
|                                                                     |             |  |             | 

The carrying amount of other assets approximates to their fair value.

11. Deferred Tax

|                           | 31 December |  | 31 December | 
|-------------------------- | ----------- |  | ----------- | 
|                           | 2005        |  | 2004        | 
|                           | £000        |  | £000        | 
|                           |             |  |             | 
|Deferred tax
      assets: | 121         |  |            | 

The movement on the deferred tax account is as follows:

|                              | 31 December |  | 31 December | 
|----------------------------- | ----------- |  | ----------- | 
|                              | 2005        |  | 2004        | 
|                              | £000        |  | £000        | 
|                              |             |  |             | 
|At 1 January                  |            |  |            | 
|Income statement
      credit | 121         |  |            | 
|                              |             |  |             | 
|At 31 December                | 121         |  |            | 
|                              |             |  |             | 

The deferred tax liability
  arises as a result of the Company being taxed under the special regime for securitisation
  companies in the Finance Act 2005.

---



Holmes Financing
  (No. 7) PLC

Notes to the Financial Statements for the year ended 31 December 2005



12. Debt securities
  in issue

|                                           | 31 December |  | 31 December | 
|------------------------------------------ | ----------- |  | ----------- | 
|                                           | 2005        |  | 2004        | 
|                                           | £000        |  | £000        | 
|                                           |             |  |             | 
|Series 2 Class A Floating Rate Notes 2008  | 726,061     |  | 803,340     | 
|Series 2 Class B Floating Rate Notes 2040  | 21,774      |  | 24,100      | 
|Series 2 Class M Floating Rate Notes 2040  | 37,005      |  | 40,970      | 
|Series 3 Class A Floating Rate Notes 2040  | 290,098     |  | 321,000     | 
|Series 3 Class B Floating Rate Notes 2040  | 15,000      |  | 15,000      | 
|Series 3 Class M Floating Rate Notes 2040  | 20,000      |  | 20,000      | 
|Series 4 Class A1 Floating Rate Notes 2040 | 343,421     |  | 341,500     | 
|Series 4 Class A2 Floating Rate Notes 2040 | 250,000     |  | 250,000     | 
|Series 4 Class B Floating Rate Notes 2040  | 28,168      |  | 28,000      | 
|Series 4 Class M Floating Rate Notes 2040  | 38,485      |  | 38,250      | 
|                                           |             |  |             | 
|                                           | 1,770,012   |  | 1,882,160   | 
|                                           |             |  |             | 

Included in the carrying amount of debt securities in issue above are the following valuation adjustments as a result of the hedge accounting treatment of these instruments.

|                                           | 31 December 2005 |   | 31 December
	      2004 | 
|------------------------------------------ | ---------------- | - | ----------------------- | 
|                                           | £000             |   | £000                    | 
|                                           |                  |   |                         | 
|Series 2 Class A Floating Rate Notes 2008  | (77,279          | ) |                        | 
|Series 2 Class B Floating Rate Notes 2040  | (2,326           | ) |                        | 
|Series 2 Class M Floating Rate Notes 2040  | (3,965           | ) |                        | 
|Series 3 Class A Floating Rate Notes 2040  | (30,902          | ) |                        | 
|Series 4 Class A1 Floating Rate Notes 2040 | 1,921            |   |                        | 
|Series 4 Class B Floating Rate Notes 2040  | 168              |   |                        | 
|Series 4 Class M Floating Rate Notes 2040  | 235              |   |                        | 
|                                           |                  |   |                         | 
|                                           | (112,148         | ) |                        | 
|                                           |                  |   |                         | 

The carrying amount of debt securities in issue approximates to their fair value.

Foreign currency notes are converted at the rate of exchange in the applicable hedging currency swap.

All the Class A Notes (irrespective of series) will rank pari passu and rateably without any preference or priority except, until enforcement of the security for the Notes, as to payments of
principal in respect of which the Class A1 Notes will rank in priority to the Class A2 Notes.

Payments in respect of the Class B and M Notes will only be made if, and to the extent that, there are sufficient funds after paying or providing for certain liabilities, including liabilities in
respect of the Class A Notes. The Class B Notes rank after the Class A Notes in point of security but before the Class M Notes.

Interest is payable on the notes at variable rates based on the three-month Sterling LIBOR, the three-month US Dollar LIBOR and three-month EURIBOR.

The Company's obligations to noteholders, and to other secured creditors, are secured under a deed of charge that grants security over all of its assets in favour of the security trustee. The
principal assets of the Company are loans made to Holmes Funding Limited, a group company, whose obligations in respect of these loans, are secured under a deed of charge which grants security over all of its assets, primarily comprising shares in a
portfolio of residential mortgage loans, in favour of the security trustee. The security trustee holds this security for the benefit of all secured creditors of Holmes Funding Limited, including the Company.

13. Other liabilities

|                         | 31 December |  | 31
	      December | 
|------------------------ | ----------- |  | ------------------ | 
|                         | 2005        |  | 2004               | 
|                         | £000        |  | £000               | 
|                         |             |  |                    | 
|Accrued interest payable | 18,945      |  | 20,709             | 
|                         |             |  |                    | 

The directors consider that the carrying amount of trade and other payables approximates to their fair value. Other liabilities due after one year amount to £nil (2004: £nil).

---



Holmes Financing
  (No. 7) PLC

Notes to the Financial Statements for the year ended 31 December 2005



14. Share capital

|                                        | 31 December |  | 31
	      December | 
|--------------------------------------- | ----------- |  | ------------------ | 
|                                        | 2005        |  | 2004               | 
|                                        | £000        |  | £000               | 
|                                        |             |  |                    | 
|Authorised:                             |             |  |                    | 
|100,000 ordinary shares of £1 each      | 100         |  | 100                | 
|Issued:                                 |             |  |                    | 
|50,000 ordinary
      shares of £1 each | 50          |  | 50                 | 
|                                        |             |  |                    | 

49,998 Ordinary shares are partly paid to 25 pence. Two subscriber shares are fully paid.

15. Retained losses

|                            | £000 |  
|--------------------------- | ---- | -
|                            |      |  
|Balance at 1 January 2004   |     |  
|Net profit for the year     |     |  
|                            |      |  
|Balance at 1 January 2005   |     |  
|Net loss for the year       | (281 | )
|                            |      |  
|Balance at 31 December 2005 | (281 | )
|                            |      |  

16. Notes to the cash
  flow statements

|                                                         | 31 December |   | 31 December |  
|-------------------------------------------------------- | ----------- | - | ----------- | -
|                                                         | 2005        |   | 2004        |  
|                                                         | £000        |   | £000        |  
|                                                         |             |   |             |  
|Loss from operations                                     | (402        | ) |            |  
|Adjustments for:                                         |             |   |             |  
|Loss on derivatives                                      | 258         |   |             |  
|Loss on foreign exchange                                 | 144         |   |             |  
|                                                         |             |   |             |  
|Operating cash flows before movements in working capital |            |   |            |  
|Decrease / (increase) in receivables                     | 1,765       |   | (635        | )
|(Decrease) / increase in payables                        | (1,764      | ) | 635         |  
|                                                         |             |   |             |  
|Net cash flow from operating activities                  | 1           |   |            |  
|                                                         |             |   |             |  

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of
three months or less.

The related party disclosures in this note apply to related parties, which comprise the following entities and individuals:

Abbey National plc, an entity with significant influence over the Company Holmes Funding Limited, a Group Company

Trading transactions

During the year, the company entered into the following transactions with related parties:

|                              |                        |  | Cash and
      cash    |  |                        | 
|----------------------------- | ---------------------- |  | ---------------------- |  | ---------------------- | 
|                              |                        |  | equivalents            |  | Amounts                | 
|                              | Interest               |  | held with              |  | owed by                | 
|                              | receivable             |  | related
      parties  |  | related
      parties  | 
|                              | 31 December
      2005 |  | 31 December
      2005 |  | 31 December
      2005 | 
|                              | £000                   |  | £000                   |  | £000                   | 
|                              |                        |  |                        |  |                        | 
|Abbey National
      plc      |                       |  | 14                     |  |                       | 
|Holmes Funding
      Limited  | 94,589                 |  |                       |  | 1,901,105              | 
|Holmes Holdings
      Limited |                       |  |                       |  | 37                     | 
|                              |                        |  |                        |  |                        | 

There were no related party transactions during the year, or existing at the balance sheet date, with the company or parent companys key management personnel.

---



Holmes Financing
  (No. 7) PLC

Notes to the Financial
  Statements for the year ended 31 December 2005



18. Parent undertaking
and controlling party

The immediate parent of the Company is Holmes Holdings Limited a company incorporated in Great Britain and registered in England and Wales.

Wilmington Trust SP Services (London) Limited (formerly SPV Management Limited), a company incorporated in Great Britain and registered in England and Wales, holds all of the beneficial interest
in the issued shares of Holmes Holdings Limited on a discretionary trust for persons employed as nurses in the United Kingdom and for charitable purposes.

The Company meets the definition of a Special Purpose Entity as defined in and is therefore consolidated within the Abbey National plc group accounts.

The ultimate parent undertaking and controlling party of Abbey National plc is Banco Santander Central Hispano S.A., a company incorporated in Spain. Banco Santander Central Hispano, S.A. is the
parent undertaking of the largest group of undertakings for which group accounts are drawn up and of which the company is a member. Abbey National plc is the controlling party of the smallest group of undertakings for which the group accounts are
drawn up and of which the Company is a member.

Copies of all sets of group accounts, which include the results of the Company, are available from Abbey National Secretariat, Abbey National House, 2 Triton Square, Regents Place, London,
NW1 3AN.

19. Explanation of transition
to IFRSs

Holmes Financing (No.7) PLChas chosen to prepare accounts in accordance with IFRSsfor the year ended 31 December 2005.

Up to 31 December 2004, the Group prepared its financial statements in accordance with UK Generally Accepted Accounting Principals (UK GAAP).

Key standards IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial
Instruments: Disclosures have been applied prospectively from 1 January 2005. All other standards are required to be applied retrospectively.

No reconciliation of profit
  attributable to shareholders, shareholders funds, income statement or balance
  sheet under IFRS for the year to 31 December 2004 has been presented as all
  applicable IFRS adjustments have only been applied prospectively.

20. Comparatives under
UK GAAP for FRS 13

These are the disclosures that would have been included in the financial statements under UK GAAP relating to FRS 13 that have not been included in the financial statements above.

The following disclosures are made in respect of financial instruments as at 31 December 2004. Short-term debtors and creditors are included in all of the following disclosures.

a. Maturity profile
  of financial liabilities

|2004                                                   | Debt securities
      in |  |                   |  |                   | 
|------------------------------------------------------ | ------------------------ |  | ----------------- |  | ----------------- | 
|                                                       | issue                    |  | Other liabilities |  | Total liabilities | 
|                                                       | £000                     |  | £000              |  | £000              | 
|                                                       |                          |  |                   |  |                   | 
|Within one
      year or less or on demand             |                         |  | 20,709            |  | 20,709            | 
|More than one
      year but not more than two years   |                         |  |                  |  |                  | 
|More than two
      years but not more than five years | 803,340                  |  |                  |  | 803,340           | 
|More than five
      years                             | 1,078,820                |  |                  |  | 1,078,820         | 
|                                                       |                          |  |                   |  |                   | 
|                                                       | 1,882,160                |  | 20,709            |  | 1,902,869         | 
|                                                       |                          |  |                   |  |                   | 

There are no material undrawn committed borrowing facilities.

---



Holmes Financing
  (No. 7) PLC

Notes to the Financial
  Statements for the year ended 31 December 2005



b. Interest rate profile
  of financial assets and liabilities

|2004                                                     |            |   |                     |   |              |   | Weighted          | 
|-------------------------------------------------------- | ---------- | - | ------------------- | - | ------------ | - | ----------------- | 
|                                                         |            |   |                     |   |              |   | average
      age | 
|                                                         |            |   |                     |   | Non-interest |   | until maturity*   | 
|                                                         | Total      |   | Floating
      rate |   | bearing      |   | Years             | 
|                                                         | £000       |   | £000                |   | £000         |   |                   | 
|                                                         |            |   |                     |   |              |   |                   | 
|Assets:                                                  |            |   |                     |   |              |   |                   | 
|Sterling                                                 | 1,902,919  |   | 1,882,173           |   | 20,746       |   | 0.1               | 
|                                                         |            |   |                     |   |              |   |                   | 
|Liabilities:                                             |            |   |                     |   |              |   |                   | 
|Sterling                                                 | (1,902,869 | ) | (1,882,160          | ) | (20,709      | ) | 0.1               | 
|                                                         |            |   |                     |   |              |   |                   | 
|*for non-interest
      bearing assets/liabilities only. |            |   |                     |   |              |   |                   | 

c. Fair values of financial
  assets and liabilities

The fair value of debt securities in issue was £1,884,404,000.

The estimated fair values of other assets and liabilities on the balance sheet were not materially different from their carrying amounts.

The estimated fair value of the cross currency swaps entered into by the Company as at 31 December 2004 was a liability of £230,051,636. The cross currency swaps mature between January 2008
and July 2040.

d. Currency profile

Taking into account the effect of derivative instruments, the Company did not have a material financial exposure to foreign exchange gains or losses on monetary assets and monetary liabilities
denominated in foreign currencies at 31 December 2004.

---