Metropolitan HoUSING TRUST has set up the UK’s first mortgage for its Muslim tenants who want to buy a property through the Homebuy scheme.

Metropolitan’s low-cost home ownership arm, Metropolitan Home Ownership, created the mortgage together with the Housing Corporation, Devonshires Solicitors, faith-based community regeneration organisation Faith Regen UK and Alburaq, a company specialising in Islamic-compliant financial services.

The scheme is funded by building society Bristol & West and the Arab Banking Corporation.

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

Rules governing other forms of affordable home ownership apart from Homebuy, state that the home must be bought by its tenant.

In Islamic mortgages, however, the properties are bought by the bank rather than the occupier.

Metropolitan is working with five housing associations – East Thames, Genesis Housing Group, Notting Hill Housing Group, Orbit Group and Southern Housing Group – on rule changes that could enable banks to own homes.

Source

Housing Today