An anomaly that led to stamp duty being paid twice on mortgages that comply with Islamic law could be fixed in July's Finance Bill.
The Bank of England working group on Islamic finance are also working together on a way to allow people to use the right to buy with a Sharia-compliant mortgage.

Islam forbids the payment or receipt of interest, so in Islamic mortgages banks buy the property and either sell it to the consumer for a higher price or sell it to the consumer at the original price and charge rent.

The transactions are liable for double stamp duty because the home changes hands twice.

Under the right to buy the property must by bought by its tenant. In Islamic mortgages, however, the properties are bought by the bank rather than the occupier.

To solve the problem, the Council of Mortgage Lenders hopes councils will sign up to a voluntary scheme in which banks will be allowed to validate right-to-buy transactions using Muslim mortgages.

The Council of Mortgage Lenders is holding a conference on Islamic mortgages on 27 March.

Iqbal Asaria, chair of the business and economic committee of the Muslim Council of Britain, said the market for Sharia-compliant mortgages would be worth £10bn within the next four years.

Source

Housing Today