Islamic Bank of Britain, the first UK FSA approved Islamic bank, has recently entered the buy to let market with the launch of the Sharia compliant Buy to Let Purchase Plan (BTLPP).
Sharia law prohibits the payment, or acceptance, of interest or fees for monetary loans. For many British Muslims this meant that owning their own home would be acting against their faith.
Islamic Bank of Britain was established in 2004 and by 2005, with some help from the government, many high street banks were also offering Sharia compliant home loans.
Whatever their faith, landlords can access the BTLPP, a variable rate product, with a 25 per cent deposit.
IBB, to mark the launch, are offering a promotional 0.5 per cent (gross) procuration fee to intermediaries for referrals that drawdown before the end of March 2012.
Landlords can obtain finance for portfolios with up to five properties, mortgages can be paid in full at any time with no early repayment charge and additional payments can be made.
The product does however limit the landlord to a maximum loan of £500,000 per property, £750,000 for London properties, but finance over £500,00 can be obtained with a deposit of 35 per cent.
Head of Sales, Simon Walker, says:
“Buy-to-let is proving to be popular with investors again. Rental yields are increasing and property is seen as a good long-term investment. IBB’s Sharia compliant Buy to Let Purchase Plan will help fuel this growing sector by catering for landlords looking for Sharia compliant finance. IBB anticipates a strong demand for the newly launched product.”
The product, in simple terms, can be likened to a Shared Ownership scheme. Both the bank and the customer purchase the property jointly with the monthly payment including rent on the bank’s share. Each monthly payment will increase the customer’s property share whilst adhering to Sharia principles.
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