Just one month after establishing its presence as the only wholly Shariah-compliant retail bank in Scotland, Al Rayan Bank yesterday launched Shariah-compliant “buy-to-let purchase plans” (BTLPPs) in the Scottish market.
The BTLPPs will enable Scottish landlords to benefit from occupancy payment rates as low as 2.99% and will enhance the bank’s existing home and property finance range for Scotland, which already provides home purchase plans (HPPs) and commercial property finance (CPF). Muslims represent just over 1% of Scotland’s population.
According to Scotland’s 2011 census, over half (54%) of the population of Scotland stated their religion as Christian – a decrease of 11 percentage points since 2001 – whilst 37% of people stated that they had no religion – an increase of nine percentage points since 2001. The occupancy payment rates for BTLPPs in Scotland are:
35% deposit contribution (65% finance to value): Fixed occupancy payment rate of 2.99% and discounted variable occupancy payment rate of 3.19% until 31 December, 2018. 25% deposit contribution (75% finance to value): Fixed occupancy payment rate of 3.39% and discounted variable occupancy payment rate of 3.49% until 31 December, 2018.
Following the fixed or discounted period, all occupancy payment rates will revert to the Al Rayan Bank variable occupancy payment rate. For BTLPP products this is currently Bank of England base rate plus 4.99%.
Unlike conventional buy-to-let mortgages, where the landlord borrows money from a lender and pays it back with interest, Al Rayan Bank’s customers in Scotland will buy their properties using the principle of co-ownership (musharaka), purchasing the property together with the bank as partners. Each month they will make an acquisition payment which will increase their stake in the property. They will also pay an occupancy payment under a co-beneficiaries agreement for use of the bank’s share of the property. At the end of the finance term, when all payments have been made the customer will have sole ownership of the property.
Commenting on the launch, Sultan Choudhury, Al Rayan Bank CEO, said, “We’re delighted to continue the momentum of our successful launch in Glasgow with the announcement of the Islamic buy-to-let purchase plans for Scotland. It is an important addition to the Scottish market and will provide landlords with a practical alternative to conventional, interest-bearing, property finance products; one that will not compromise their values or faith.”
Al Rayan Bank has been a pioneer of British retail Islamic banking for 12 years. The first wholly Shariah-compliant retail bank in the UK, it has earned a reputation for providing innovative products which appeal to people of any faith. Last year, the bank was named by Global Finance magazine as one of the best Islamic banks in the world, and by Trade Finance Global as the Best Islamic Finance Services in Western Europe.
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