You should be aware that there are key differences between buying a property to use as your own home or as an investment for rental purposes. This Buy to Let section outlines some of these to help you make the right decision. Under current rules, the majority of Buy to Let transactions are not regulated by the Financial Services Authority.

We are aware that there are few alternatives available to Muslims seeking to invest their funds in a way which complies with their faith. With this knowledge we provide Shariah compliant finance to help you purchase residential property as an investment, in a market which is now commonly known as 'Buy to Let'.

Ownership of property has always held a strong attraction for our customers as a way to potentially earn a return from rental income and, if property prices rise then also capital appreciation on your investment. Earning an income from property is considered permissible within Islam, provided that the property is not involved with immoral or prohibitive activities, such as gambling or the sale of alcohol.

Scholars encourage the ownership of property and often quote a hadith;

"whom so ever sells his/her real estate and does not exchange for the (entire) sale price for another (similar) estate, then he is not blessed in this transaction". (reference:'Ibn Majah') Scholars will often quote this hadith when describing the basic necessity of housing as well as suggesting the long-term benefits from the ownership of a physical asset such as property when compared to owning perishable goods.

Is it Shariah Compliant?

Buy to Let follows the Islamic principles of Diminishing Musharaka and Ijara, and are the same principles we follow if you buy a property as your main residence with an home finance product which have all been fully reviewed by the Shariah board and their fatwa is available upon request.

The amount of financial assistance we can provide will depend on the value / purchase price of the property and the estimated level of rental income you can expect to receive. For Shariah reasons subsequent top up finance (capital raising) is not permitted.

Please contact us to determine the amount of finance you can obtain.

Buy residential property to let to tenants:

• Obtain up to 65% of the property value/purchase price - whichever is lower
• Build a portfolio of up to 5 properties
• Refinance (remortgage) an existing interest bearing mortgage
• Purchase a freehold or a leasehold flat or house (subject to a minimum lease length of 70 years)
• Sell the property when you wish, no penalties (Please note capital gains taxes may be payable on sale of your property)
• Make full payment whenever you wish, no penalties
• Make additional payments prior to each rent review, no penalties
• Can be in addition to your existing home finance agreement or mortgage
  

The Property

The good news is there are relatively few property qualifications

• The property should be ready to let in its current state or require minimal improvements, such as redecorating at time of valuation
• Multiple properties/ portfolios are allowable - please refer to our Shariah Helpdesk for specific criteria
• The property must have a value of £40,000 or more
• The rent you charge your tenant must be greater than the rent
• A basic valuation is required. In addition, the Valuer will evaluate the ease of letting the property and provide an estimate of the likely income from renting the property unfurnished
• The maximum finance allowed for individual properties is £500,000, being up to 65% of the property value
• We accept ex-local authority houses and ex-local authority flats, but not ex-office conversions or converted ex-local authority office blocks

Your Requirements

• Are an individual aged 21 or over (if a joint application, at least one applicant must be over 21). There is no maximum age.
• Have a minimum of 12 month previous Islamic home finance or mortgage borrowing experience within the last 5 years
• Are resident in the United Kingdom
• Minimum finance amount is £15,001 for purchases and £25,001 for refinances
• For up to 75% of the value of the property , it is not necessary to provide details of your income and expenditure
• Must let the property on an Assured Shorthold Tenancy basis.