The Help to Buy scheme offered by the Government to make it easier for people to buy a home is about to go through a change. The Government has decided to extend the scheme to ensure Muslim borrowers can also take advantage of it.

Why does the scheme require changes to be open to Muslims?

Muslims live according to Sharia law. This law states that loans cannot be used by Muslims. However Home Purchase Plans can be used by those living in accordance with this law. Conventional mortgages cannot be applied for by Muslims, but Home Purchase Plans can be used instead.

A Home Purchase Plan is offered by Islamic banks and creates a situation whereby a customer can get shared ownership of a property. They own a portion of it and so does the bank. They put down a deposit on the property in much the same way as mortgage customers do. However the remainder of the property is owned by the bank.

Over the course of the Home Purchase Plan the customer pays instalments to their chosen bank. These instalments cover two areas – a rental payment for staying in the property and an acquisition payment that will eventually allow them to own the property outright instead of the bank owning a portion of it. Thus Muslim customers can buy a home to live in without having to contravene the rules laid down by Sharia law.

Decision welcomed by Muslims struggling to get on the housing ladder

The decision has been warmly welcomed by those who can now access Home Purchase Plans with the assistance of the Help to Buy scheme. According to reports the Islamic Bank of Britain will shortly enter the market as the first lender to provide the Home Purchase Plans for Muslim borrowers. Access to finance from the Help to Buy scheme will make home ownership a reality for more Muslim customers.

However the discord over the availability of the Help to Buy scheme still rumbles on. Some experts still feel there is a real danger of creating a housing bubble much like the one seen several years ago at the start of the economic crisis. While conditions now are very different to how they were then, some are concerned at the availability of mortgages with just a 5% deposit.

It remains to be seen how popular the new extension of the Help to Buy scheme will be with the Muslim population in the UK. However the real question is whether the scheme itself will continue to be popular and whether it will continue to stir up this amount of controversy. Perhaps the real controversy is the rising state of house prices and the relative stagnation of earnings. This has made buying a house extremely difficult for many people. For some, even the presence of the Help to Buy scheme is not enough to make a difference, and this will surely apply to Muslims as much as to the rest of the population.

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