Prior to the year 2002 Muslims living in the United Kingdom found it impossible to Purchase or Remortgage / Refinance their home under a Home Purchase Plan or a Landlord wishing to Purchase or Remortgage / Refinance by way of Buy to Let finance- due to their Islamic faith. This is because under the Islamic rulings a Muslim is forbidden under Shariah Law to pay or receive interest. The rules governing Islamic Finance are derived from the Sharia. The Sharia provides the framework for a set of rules and laws, governing economic, social, political, and cultural aspects of Islamic societies.
Shariah does not permit the acceptance of an interest rate or fees for lending. Also, it is prohibited to allow investment and financings of businesses that create, sell or deal in products that are contrary to Islamic principles (e.g tobacco). It is thought that wealth should be created through legitimate trade in assets.
As all forms of interest are forbidden, the financial model of Shariah financiers works on the premise of risk sharing. Risk is shared between the customer and financial institution in relation to the asset or product financed, on the basis of prior agreed terms, and any profits is then split between them.
In 2002 however, there was an acceptance by the Government to allow Shariah compliant mortgages to be made available in the United Kingdom. Since 2002 Islamic Finance has been growing every year and being utilised by both British Muslims and non-Muslims living in the United Kingdom and abroad as expats. Many non-Muslims have recognised that although Islamic Finance may not be something which is mandatory within their faith and belief- a choice of having an alternative to the standard interest-bearing system offered by conventional lenders- is something which has become intriguing and of interest to them. There are now a number of Banks in the UK that now offer Islamic Finance Products.
At White Horse Solicitors & Notary Public we pride ourselves on offering comprehensive and specialised legal advice in accordance with their faith. We offer straightforward and jargon free Sharia compliant legal services to our client’s living in the UK and also expats living all around the world wishing to purchase a Property in the UK- catering for all needs, whether it is buying a Property to live in, Remortgage / Refinancing your Property with Islamic Finance or buying / Remortgage / Refinancing as a Landlord for investment purposes.
The vast majority of solicitors and conveyancers in the United Kingdom are not competent in providing a service which involves Islamic Finance due to the complexity of the nature of such a transaction. Our solicitors at White Horse Solicitors & Notary Public have extensive Islamic finance experience across the core practice areas of Islamic Finance / Mortgage, with strong working relationships with all of the Islamic lending institutions and have an established rapport with respective legal teams acting for the respective Islamic Banks. This alongside being recognised as a leading Solicitor firm in the UK dealing with Sharia compliant property transactions, allows us to complete transactions swiftly and smoothly as possible- without any potential delays or hiccups which may arise when using a firm a solicitors who are not well versed with Islamic Finance and Shariah Law. We are able to advise our clients on all aspects of Islamic Finance including both Residential and Commercial Property.
White Horse Solicitors & Notary Public regularly deals with all the major Islamic Banks in the World and their products and therefore is recognised as a leading Solicitor firm in the UK dealing with Sharia compliant property transactions.
We at White Horse Solicitors & Notary Public understand that clients do have a busy lifestyle and this can sometimes lead to difficulty in getting hold of their solicitors at a time which suits them. In order to make the process easier for our valued clients we have mechanisms in place whereby all our clients are given access to their own personal Online Portal with unique User Names and Passwords whereby they can use to track the progress of their case 24 hours a day- 7 days a week in real time.
In addition to specialising in Islamic Finance conveyancing transactions- White Horse Solicitors & Notary Public is also an accredited member of the Law Society’s Conveyancing Quality Scheme (CQS). The quality mark provides a recognised quality standard for residential conveyancing practices by the Law Society. Our firm therefore establishes a level of credibility for clients and other stakeholders such as regulators, lenders and insurers. CQS has annually deterred fraud since opening in 2011. This has built a trusted community while continuously improving standards of residential conveyancing sector.
Being a member of the CQS proves that our firm has all necessary skills and expertise to provide residential conveyancing advice. Our clients can feel assured that they will receive no less than the best guidance to understanding information related to the process, options, costs and timescales from the outset. Being a CQS member also allows us to remove barriers and reduce complaints by educating clients about the conveyancing process.
As an accredited member under the Law Society’s Conveyancing Quality Scheme (CQS), we are entitled to display (as below) the Quality Conveyancing Scheme accreditation mark in relation to our residential property conveyancing services.
No. Islamic banking is for all individuals regardless of their religious beliefs. Many non-Muslims have recognised that although Islamic Finance may not be something which is mandatory within their faith and belief- a choice of having an alternative to the standard interest-bearing system offered by conventional lenders- is something which has become intriguing and of interest to them.
The most important difference between Islamic and conventional banking is that Islamic banking must follow the Shariah. Islamic banking must also avoid activities such as riba’ or gharar (excessive uncertainty). For example, instead of charging interest on financing given out, Islamic banks give financing based on Musyarakah (Partnership Agreement) and will share any profit and loss.
Islamic Finance or Shariah compliant mortgages are structured so that the person who wishes to purchase / refinance / remortgage – the property pays no interest but the banks still make money by charging their customer’s rent as opposed to interest. It might be argued that charging rent or making a profit is no different to charging interest, in that ultimately the providers still make money. It is how that money is made that is the underlying difference between Islamic mortgages and conventional ones. So instead of making money through interest, banks will make money through profit or through rent when the bank owns the property as an asset.
The finance products offered by the Banks are usually based on one of these instruments:
Simply, ‘Riba’ is interest. Any amount, big or small, over the principal, in a contract of loan or debt is ‘Riba’ prohibited by the Holy Quran, regardless of whether the loan is taken for the purpose of consumption or for some production activity.
The justification behind the prohibition of interest in Islam suggests an economic system where all forms of misuse (“neither wrong nor be wronged”) are eliminated. In particular, Islam wishes to establish justice between the financier and the individual or corporate body taking the finance: the financier should not be assured of a positive return without doing any work or sharing in the risk, while the individual or corporate body, in spite of his management and hard work, is not assured of such a positive return.
The mechanism of Islamic Finance can be defined as a contract “to transfer the usufruct of a particular property to another person in exchange for a rent claimed from him.” In other words, the most popular form of Islamic Finance is comparable to a conventional leasing mode of financing. You pay rent for the use of the property, instead of paying interest on the loan amount. Bank purchases the property either from the Seller, or customer in the case of refinance, and then lease it to the customer over an agreed term.
The distinguishing feature of this mode is that the assets remain the property of the Bank. Over the term of the finance, the Bank become landlord and the customer assume the role of tenant. The Shariah allows earning profit through renting out of fixed assets provided that the lessor bears all the ownership related risks attributable to those assets.
Majority of the Bank’s offering Islamic Finance in the United Kingdom have been given the green light in being ‘halal’ (permissible) by Scholars who are independent to the Banks’ itself. Examples will include the two major Bank’s providing Islamic Finance at present namely- Al Rayan Bank PLC and Gatehouse Bank PLC. Al Rayan Bank is overseen by an independent Sharia Supervisory Committee (SSC) on which sit highly experienced and world-renowned scholars with decades of experience in Sharia and financial law. Every product offered by the Bank is fully approved by the SSC. Gatehouse’s Shariah Supervisory Board (SSB) comprises of individual Shariah experts who are independent from the bank, but are active in overseeing its operations. The SSB reviews transaction documentation and other contractual obligations entered into by Gatehouse including standard terms of employment and insurance arrangements. The SSB is formally appointed by the Board of Directors, pursuant to the delegated authority of, and reporting directly to, the Bank’s shareholders.