Customers across the UK will now be able to benefit from Sharia-compliant home purchase plans (HPPs) as the UK’s financial regulator, the Financial Conduct Authority (FCA) has authorised the Islamic property finance fintech, Offa, to offer an alternative to conventional residential mortgages.
Since charging interest is forbidden in Islamic finance, a HPP involves the Islamic finance principles of co-ownership-with-leasing where customers acquire the property in partnership with Offa and make monthly payments to increase their share, over time owning it.
This is the first HPP licence the FCA has approved for a newly-authorised entity in more than seven year, and will allow Offa to become the third active provider of HPPs in the market. Offa has seen great success lately, rapidly expanding its staff hires and product launches, as well as growing its acquisitions.
For example, the company recently acquired Bank of Ireland’s Alburaq Sharia-compliant home finance portfolio in a landmark deal utilising a unique funding structure, including more than 350 home purchase plans.
This is just one achievement in many that has enabled the firm to improve its Sharia-compliant offering and build on the success of past products, like its Sharia-compliant buy-to-let (BTL) product. This BTL is based on the same principle as its HPPs except that those customers make payments from received rental profits.
Adhering to regulations
Sultan Choudhury OBE, executive chairman at Offa, said: “This is a significant and hard-won milestone for us at Offa. The real winners of course will be our customers, who will now gain greater access to our fast and easy Islamic home finance services thanks to our modern, tech-driven and paperless systems.
“By combining our teams’ decades of industry experience with the latest technology, we are bringing Islamic finance into the 21st century, leaving behind the onerous paperwork and cumbersome systems that many customers have typically had to suffer in the past. Gaining this important authorisation is another step toward achieving that.”
Riaz Husain, chairman of Offa Money Ltd, added: “Receiving this authorisation from the FCA will provide reassurance to our customers that Offa is adhering strictly to regulations as we provide high quality, faith-based Islamic home finance products to aspiring property investors and landlords across the country.”
