Islamic Bank of Britain launches Sharia compliant ‘rent only’ Buy to

09 January 2013

Islamic Bank of Britain plc (IBB, the UK’s only wholly Sharia compliant retail bank, has diversified its Sharia compliant Buy to Let Purchase Plan (BTLPP) product range with the launch of a rent only BTLPP. (NOTE: The ‘rent only’ feature of this BTLPP does not refer to the tenancy agreement between the customer and the tenants occupying the rental property. Instead it refers to the payment arrangement between the customer and the Bank, which consists of two elements, i.e. acquisition and rent payment. See below for a detailed explanation). 

  • IBB’s BTLPP is a variable rental rate product available to landlords, of any faith, with a deposit of 35% at a rental rate of 5.49%. Other features include:
  • The ability to make additional acquisition payments, without penalty, subject to a minimum amount of £4,000
  • No early payment charge for clearing the finance in full
  • An administration fee of 1% (a minimum fee of £995 applies)
  • Minimum property finance of £30, 000, maximum finance of £500, 000 and minimum property value of £90, 000
  • The ability to secure an Agreement in Principle (AIP) online at or apply directly through the Bank’s branches and contact centre. The BTLPP is also available via mortgage intermediaries

Commenting on the launch Imran Pasha, Head of Sales and Service, Islamic Bank of Britain said, “IBB launched its Sharia compliant Buy to Let Purchase Plan in November 2011 and we have seen a healthy demand for the product since then. The recent launch of the rent only BTLPP is the natural next step. There is a growing demand from landlords for Sharia compliant property finance and a rent only product provides them with an affordable way to access it.” 

As a Sharia compliant product, IBB’s BTLPP differs from a mortgage where the customer borrows money from a lender which is then repaid with interest. A BTLPP uses the Islamic finance principles of co-ownership (Musharaka) with leasing (Ijara), where IBB and the customer buy the property as partners and the customer pays rent on IBB's share in the property.

The customer’s monthly payment, therefore, consists of an acquisition payment and rental payment. The former increases the customer’s share in the property and the latter is rent paid by the customer for the share that the Bank owns. At the end of the term, when all acquisition payments have been made and the finance has been settled, ownership of the property transfers fully to the customer. However, with a rent only BTLPP the customer’s payments only cover the rent paid to IBB and does not increase the customer’s share in the property. To acquire IBB’s share in the property the customer will need to make a lump sum payment at the end of the finance term.

The source of funds for IBB’s BTLPP is 100% Sharia compliant which means that IBB does not use any interest bearing instruments. Instead it uses its own funds or the savings deposits from its customers, all managed entirely in accordance with ethical and Sharia principles.


About Islamic Bank of Britain

Islamic Bank of Britain plc (the Bank, IBB) has pioneered Sharia compliant retail banking in the UK and now offers the largest range of Sharia compliant retail financial products in the UK. These include Sharia compliant mortgage alternatives, the Home Purchase Plan (HPP) and Buy to Let Purchase Plan (BTLPP), current accounts and savings accounts. The Bank was also the first to introduce Sharia compliant business banking to the UK, and now offers a wide range of institutional and business banking products and services, including Commercial Property Finance. Several of the Bank’s products remain unique in the UK retail financial market.

The Bank is authorised and regulated by the Financial Services Authority and is a member of Financial Services Compensation Scheme.

Sharia compliant banking operates without the use of interest and is founded on Islamic finance principles derived from trade, entrepreneurship and risk-sharing. IBB has a dedicated a Sharia Compliance Officer (SCO) and a panel of respected Sharia Scholars, called the Sharia Supervisory Committee (SSC), which acts as an independent body to guarantee that its products and activities are Sharia compliant.   Whilst IBB offers products and services that are designed in accordance with Sharia principles, it is an inclusive, ethical organisation and welcomes customers of all faiths looking for a bank with a transparent, prudent and community-focused approach.

Notes to editors:

Interviews with Islamic Bank of Britain are available on request. The bank should only be referred to as “Islamic Bank of Britain”. If abbreviated please use “IBB”.


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