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Right to buy - Islamic mortgage |
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Can you have an Islamic mortgage with a right to buy purchase? The answer
is no, because right to buy is incompatible with Islamic mortgages (since
ownership must pass directly from the seller to the buyer).
Existing Sharia-compliant mortgages avoid that problem, but that is not
possible under the right to buy scheme. With a Murabah, the bank buys the
property on behalf of the buyer and then resells it to the buyer at a higher
price, with the buyer paying for the property by instalments. Alternatively,
there is the Ijara, under which the bank buys the property and then leases it
to the buyer (with the bank agreeing to transfer the property to the buyer at
the end of the lease). Source: The Law Society’s Conveyancing Handbook
(13th edition; £79.95).
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October 2006 |
