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UK : Double stamp duty abolished on Islamic mortgages

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Rakhila Parveen, a trainee GP from Bolton, is one of many in the Muslim community who welcomed news that the practice of paying double stamp duty on Islamic mortgages is to be abolished. Like other Muslims buying a property in Britain using a mortgage that complies with sharia law, she had no choice but to pay stamp duty twice in order to stay true to her religious principles. Dr Parveen said: « This [reform] will benefit the whole Muslim community, especially the new generation of young professionals. » The move received widespread approval from muslims and from the banks. The Council of Mortgage Lenders said it would mean a wider choice of mortgages and a fairer system for Muslims. Iqbal Asaria of the Muslim Council of Britain said: « We are very pleased. We expect new products to be launched by the end of the year. »

Sharia law governs how Muslims invest, and under its strict regulations the payment or receipt of interest is forbidden meaning that conventional mortgages are unsuitable. An alternative system operates whereby a bank buys the property on the customer’s behalf and then sells it to the customer charging an additional lump sum on top of the asking price.

Technically, the property has been bought and sold twice so stamp duty is charged on each transaction. Both sums are currently added to the final amount paid by the buyer making Islamic mortgages more expensive.

Mary O’Hara, The Guardian – April 10, 2003

 
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Publié par le avril 10, 2003 dans Home Finance, UK

 

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