Islamic Mortgages 51
Basel II, all Islamic home finance products now have a risk weighting of
35 per cent (provided the finance to value of the property is under 80 per
cent);
- Disadvantages under the various public sector home ownership schemes,
such as “right to buy”, where because of the involvement of the financier
as the owner of the property, the customer may be unable to take
advantage of the benefits offered under the schemes. This remains an
issue at the current time.
Another Datamonitor report in 2005 stated that the market has grown at
an average of 68 per cent per year since 2000, and that by 2009 the market
will be worth £1.4 billion in gross advances. This figure was more realistic
than the 2002 report as they were based on actual market figures.
Regulation and legislative changes
The government and the UK financial authorities have adopted a flexible
stance towards the regulation of Islamic financial products, which is critical
to innovation and growthof this promising Islamic home finance industry.
The Financial Services Authority (FSA)−the independent body that
regulates the UK’s financial services industry−have recently included
Islamic home finance in its regulated products (this new regulation came
into effect on April 2007). This move was the latest of many regulatory and
legislative changes which took place over the last few years in an attempt
from the UK government to provide a levelled playing field for Islamic
financial products with conventional ones.
