Islamic Mortgages and The Bank of England

• 15/08/2002

In August 2001, the Governor of The Bank of England, assembled a number of interested parties to investigate the reasons why there was not a greater availability of Islamic mortgages in the UK. The parties involved include community representatives as well as Islamic finance specialists and we are proud that The United Bank of Kuwait, the sole provider of Islamic mortgages in the UK, was part of this.

Through our experience we were able to relate the principle problems encountered when providing Islamic finance for property purchase in the UK. These problems relate to issues such as Stamp Duty, Public Sector Housing Discount Schemes (Council ‘Rights to Buy’), State assistance in cases of default and other payment protection issues, legal advice for clients and other similar matters.

These issues are now being examined by the relevant Government Departments and the group meets from time to time to discuss the progress.

For real progress to be made it is likely that new legislation will need to be introduced to amend the laws to be more accommodating for the different methods of providing finance. Our experience suggests that this will be a very long process so while it is encouraging that this matters are now being looked at we do not expect any positive results for some years.

We will keep you posted if any further developments occur.