The Treasury's pledge to scrap the double charging of stamp duty on Islamic mortgages has been welcomed by the mortgage industry as a step towards a level playing field with non-muslims.
Under current regulations muslims are effectively forced to rent their property from a specialist financier because they are unable to pay interest under Islamic law. The lender often sells the property for the same price but charges additional rent for a certain period of time, thereby causing stamp duty to be charged twice.
But under proposals outlined in the Budget this double charging will be abolished.
The move has been welcomed by Council of Mortgage Lenders, which says stamp duty is one of the most significant hurdles to the development of more widespread Islamic home finance. However, Charcol warns that ironing out the technicalities in the legislation could take time.
Andrew Buxton, who chaired a Bank of England working party addressing the issue, says: “This will help make the mortgage market fairer and more accessible to the muslim community in the UK.”
Charcol senior technical manager Ray Boulger says: “It will help those who haven't bought a house because of the regulation but it could be a long time before it is introduced.”