The CML has been campaigning for reform to deal with this issue, and is pleased with today’s budget announcement that the Finance Bill will contain measures to solve it.
Mortgage lenders have been taking an active interest in the development of Islamic finance in the United
Kingdom. At the end of March, the CML ran a seminar on the subject of Islamic mortgage finance, at
which the Governor of the Bank of England gave the keynote address. The legislative change will give
further impetus to the development of suitable products for Sharia-compliant finance in the UK.
The stamp duty problem exists because, in Islam, the payment or receipt of interest is strictly forbidden.
Islamic mortgages rely on the involvement of a financier who buys the property, and then sells it on to
the buyer and collects instalment payments (similar to traditional mortgage payments) for the repayment
of the capital. Instead of charging interest, the financier often sells the property for the same price but
then charges additional rent on it for a specified period of time. Stamp duty is therefore charged twice –
as the ownership of the property transfers twice – once to the financier, and once to the ultimate buyer.
This has necessarily been reflected in the price of the mortgage finance. Re-mortgaging also presents a
