The product has a variable rental rate available to landlords of any faith allowing them to make additional acquisition payments without penalty subject to a minimum amount of £4,000.
Imran Pasha, head of sales and service, said: “The alternative plan represents a major opportunity for intermediaries looking to develop their business in the ethical and Sharia property finance market.
“There is a growing demand from landlords for Sharia compliant property finance and with a rent only product from IBB, independent financial advisers can recommend a product that provides them with an affordable way to access it.”
Pasha said the bank also offers financial incentives for the IFA who can refer successful leads and a competitive procuration fee which matches the figures offered by other home finance providers for fully packaged cases.
The rent only plan has no early payment charge for clearing the finance in full, an administration fee of 1% (a minimum fee of £995 applies), and a minimum and maximum loan of £30,000 and £500,000 respectively.
The rent only feature of this plan does not refer to the tenancy agreement between the customer and the tenants occupying the rental property.
Instead it refers to the payment arrangement between the customer and the Bank, which usually consists of two elements, the acquisition and rent payment.
As a Sharia compliant product, IBB plan differs from a mortgage where the customer borrows money from a lender which is then repaid with interest. The buy-to-let purchase plan uses the Islamic finance principles of co-ownership (Musharaka) with leasing (Ijara) where IBB and the customer buy the property as partners and the customer pays rent on IBB's share in the property.
