Right to Buy Scheme – Parliamentary Written Answer

Henry Smith: To ask the Secretary of State for Communities and Local Government when he expects Islamic mortgages to be available for Right to Buy council home purchases; and if he will make a statement.  

Kris Hopkins: The UK has long worked to ensure there is a level playing field in regulation and tax for consumers of Islamic finance products. For example, the double taxation of Islamic mortgages was removed, and there is now certainty of income tax and corporation tax treatment for financial institutions, companies and individuals who lend or borrow under Islamic finance arrangements. As announced by the Prime Minister at the World Islamic Economic Forum in London in October 2013, the Government will make sure there is a type of Start-Up Loan that is totally consistent with all the principles of Islamic finance, as well as for student loans and for the enterprise allowance. We are keen to enable social tenants to achieve their aspiration for home ownership and do not wish to preclude the use of Sharia'a compliant finance by tenants who want to take up their Right to Buy. Under the terms of the Right to Buy legislation, however, ownership of a property must pass direct from the landlord to the purchasing tenant, which is incompatible with Sharia'a compliant finance. The issues raised by such finance are complex and we welcome representations on this issue, with a view to finding a way to both protect the rights of individuals and provide security for Government funds.