The government’s Help to Buy mortgage scheme can now be used by providers of Sharia-compliant Home Purchase Plans, often referred to as ‘Islamic mortgages’ financial secretary to the Treasury Sajid Javid has announced.
Following the launch of the Help to Buy scheme, the government has been looking at how to increase access to the scheme so providers of HPPs can also benefit.
From yesterday, the rules have been changed to allow banks that sell HPPs to purchase a government guarantee for them. As well, the Islamic Bank of Britain has said it intends to offer HPPs under the scheme.
In a HPP arrangement the customer and bank split ownership of the property. After buying a portion of the property with their initial deposit, the purchaser then pays regular installments to the bank which cover rent for the part they do not own, as well as an acquisition payment meaning the customer gradually buys the property from the bank.