Through its London subsidiary, ABC will market the product under an Islamic brand name, alburaq, that will also be used to market financial services in the Arab world. Financing for the product and full back-office support services will be provided by Bristol & West (B&W), part of the Bank of Ireland Group.
The agreement will bring together Bristol & West’s expertise in the UK housing market and ABC’s authority within the world of Islamic finance to create a competitive and flexible product that will adhere strictly to Islamic law.
The initial alburaq home finance packages are expected to be available within the next three months. In essence, they will enable the customer to become the co-owner of a home alongside B&W, with future payments structured to buy out B&W’s share while also paying rent for occupation of the property. No direct loan is involved, enabling the customer to comply with the strict Islamic prohibition on payments of interest.
The net cost of an alburaq package will be broadly comparable to the cost of an equivalent mortgage, thanks in part to last year’s Budget which exempted co-ownership schemes along these lines from the need to pay double Stamp Duty.
The UK has a large and growing Muslim community, with many households likely to opt for a financing package that will comply with their religious beliefs.
Keith Leach, a senior manager at ABC said: “We are very excited to be working with Bristol & West to launch the alburaq brand and home finance product in the United Kingdom. I believe our arrangement will offer customers the best of both worlds, marrying our experience and knowledge of Islamic finance with the Bristol & West’s undoubted reputation as a leading provider of home finance."
Julie Blunden, head of market development at Bristol & West said: “Working with Arab Banking Corporation has given us a valuable insight into the financial needs of the Muslim community. This agreement furthers our aim of ensuring that home ownership is accessible and affordable for anybody who wishes to purchase their own property”
