Halal mortgage and its application under English law
Uneek Homes Halal Investment Mortgages
When it comes to financing home loans, people have many queries related to interests and deposits. Many banks provide housing loans with minimum interest, but Uneek Homes investment halal mortgages prohibit interest and comply with Islamic Sharia.
Islamic financial markets are growing rapidly, not only in Muslim countries but also in European countries, specifically in England, where many Muslims are looking for support for halal mortgages when deliberating over shifting home.
Halal Mortgage Under the British Government
There are various countries, banks, and people opting for Islamic financial contracts; this gives rise to the expansion of the Islamic finance sector. Even though the banks and financial institutions in England tend to offer loans and other Islamic finance products following shariah-compliant, they lack awareness about the halal mortgage contract and its legal and proper functioning of financial structure.
The government of England has understood the need to pass the relevant regulations to make halal mortgage products pertinent under the U.K. authorized system. This was officially done in April 2003 as a part of the government budget. This has allowed many banks to acquire the procedure of halal mortgages for their clients. Various banks in the U.K. offer Islamic finance products together with halal mortgages. It is unclear to state which bank or financial institution has first initiated this service.
Some references say that it was first started in London by Al baraka bank in 1988, which later expanded over Europe. Other sources say it was the United Bank of Kuwait in 1996. Yet another source refers to the HSBC was the first bank to come up with halal mortgage in the U.K. in 2003. Hence it is still doubtful to say which bank started the halal mortgage. Also, the knowledge and terminologies regarding Islamic banking seem to be imprecise. They needed to be reviewed, revised, redrafted, and brought up within a uniform frame.
English law and Islamic law
Islamic financial system, including halal mortgage, works differently compared to the English house on behalf of the client and resells it for the client as per the documentation provided by Islamic law. While lending the money to the client bank cannot charge interest as it is strictly prohibited under the Sharia-compliant. In Islamic law, the contract is the agreement between the parties and the main constituents corresponding to English contract law. Both laws have many similarities and functions according to their set of rules. In the U.K., the halal mortgage is acceptable, but it has to cover the aspects of English laws. The major difference here is that lending money is acceptable to the Islamic law, but charging the interest on that money is considered haram; in other words, it is nearly a sin to make money out of someone's earnings according to the ethics of Quran.
Background of the Halal Mortgage in England
The ongoing demand of the Muslim community for Quran-compliant home finance products has compelled the government of the U.K. to take the matter seriously and pass laws in favour of the Islamic financial structure, which works on the sharia laws. This issue started to be raised in the 1990s. After which, the government formed an association within the structure of the bank of England to legalize the regulations and functioning of Islamic financial products, including halal mortgages. The outcome of the work of this team is now a part of the Finance Act 2003; this act has bought a noticeable change in the British finance legislation. The popularity of this act lies in the fact that it has been introduced to abolish the duple fees of stamp duty land tax. It can be seen that the British government has put great efforts to put the city of London on the international financial map by making it the most captivating centre of Islamic finance throughout the world.
Rules of the Quran Related to the Mortgage Contract
Halal mortgage contract has been derived from the components of the general Islamic contract as the Quran does not specify the mortgage contract distinctly.
In Quran, some verses have various rules and regulations in concern with contracts in general, and these are constructed to develop a proper mortgage contract based on Islamic principles.
According to Quran, the sale is accepted as the widespread concept of trading operations, but it does not refer to any specific form of contract that dominates that sale.
The Quran permits any contract to be applicable unless it does not contradict basic Quranic rules, especially the one about riba (interest), which is strictly prohibited under these rules.
As complied by Quran, the Islamic contract has the same basic elements as those of English contracts, such as offer, acceptance, satisfaction, and consent between the parties with mutual understanding and fulfilment.
Reasons for the prohibition of riba (interest)
The abolishment of riba protects the interest of people who have creative business ideas and plans, as not everyone can pay interest and get a loan to initiate their business. This eventually negatively leads to the economy’s downfall as innovative business ideas are not given a chance to
execute. Another reason for its prohibition is that only the client will suffer the risk of loss. There is no sharing of profit and losses between the financier and the client; thus, the bank is excluded from the risk or burden the borrower needs to bear.
Government Contribution Towards the Legal Applicability.
The English government has favored halal mortgages to remove the legal hindrance to applying English law. This has been done to respect the needs of Muslim consumers, and they can have a halal mortgage with equal protection as those who are under existing FSA mortgage regulation. The British government understands the positive points and confirmed the necessary regulations, which allows the halal mortgage to be treated the same as conventional mortgages. The government here plays a vital role in promoting the growth of Islamic types of finance in the U.K, especially mortgages. Few measures have also been taken for the cancellation of double stamp duty. Hence the government of England has contributed a lot to regulating Islamic finance laws and their acceptability.