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All you need to know about Islamic Finance in the UK

Under Shariah Islamic law, the governing of making money from money, such as charging interest, is usury and therefore not permitted.

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UK Islamic Mortgages worth Billions

There are still many obstacles to clear:

The FSA does not regulate Ijara mortgages, financiers continue to face adverse capital weighting treatment of Ijara finance plans. As a result Islamic mortgages are still not as competitive as traditional mortgages. This is something must be addressed.
There is still a lack of customer awareness and understanding of Islamic mortgages.
Islamic mortgages prohibit the customer from receiving housing benefit.
They are preventing individuals from purchasing under the right to buy scheme.
Finally, the lack of compliant Muslim insurance products on the market makes these mortgages less appealing.

New changes however are on their way to resolve some of these problems. The introduction of the UK parliamentary Regulation of Financial Services Bill is likely to make Ijara mortgages a reality; lenders are optimistic of the change in capital weighting. The ODPM is looking to integrate Islamic mortgages into the right to buy scheme. And finally, as more lenders enter the market it should make it more competitive, drive down costs, making the Islamic Mortgage comparative competitive with conventional mortgages.

Source for statistic: 'UK Islamic Mortgage 2005' published July 2005 by Datamonitor.

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