Amanah Isamic mortgage

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  • #31768
    Anonymous
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    Hi sorry to bring this up again as I know it has been discussed previously and I have read all the other threads but am still not sure how these type of Islamic mortgage should be treated. The claimant has an Amanah home finance arrangement with HSBC for the property which means that they have bought a percentage of the property (15%) and the bank have bought a percentage of the property (85%). The property ownership is then transferred to be held on trust by HSBC Trust company for the bank and the claimant. the customer then makes a monthly payment to the bank which consists of a capital payment which is used to buy part of the bank’s share in the property and a rental element which is just to pay rent to the bank for use of their share of the property (Similar to the usual mortgage arrangement of capital and interest). The customer only wishes to claim HB for the rent payments. They have a 30 year tenancy made under a deed but they argue that it is a “shared ownership tenancy” and so therefore although it is a long lease under Reg 12(2)(a) it still qualifies for HB. They also argue that it is discriminiation on the grounds of religion not to pay as they can’t claim under DWP interest scheme or HB scheme.
    I can’t see that they are the owner, I also find it difficult to describe these payments as mortgage payments as there is no interest payable. However, is it a “shared ownership tenancy”? also does Reg 9 1 e of the HB regs apply? I guess it would escape this as the purpose is not to take advantage of the HB scheme.
    Does anyone have any experience of this? Do you pay? have you been to TAS? Are there no commissioner decisions?
    Sorry for asking but this is the first one I have ever seen.

    #88862
    Anonymous
    Guest

    I don’t think there is any caselaw (yet) but there is a lot of (hopefully) helpful information in these previous threads:
    http://hbinfo.org/forum/viewtopic.php?t=18728
    http://hbinfo.org/forum/viewtopic.php?t=14932

    #88863
    Anonymous
    Guest

    There is some recent caselaw from Judge Mesher CJSA/2746/2008.

    Judge Mesher points out that to be effective, any tenancy of more than 7 years needs to be regisetered with the land registry. If its not registered, its not a long tenancy, and any payments made under it could be eligible for HB.

    If the tenancy is properly registered and the lease is for more than 21 years, the payments may be eligible housing costs for IS/JSA/PC
    “charges by way of rent or ground rent relating to a long tenancy”

    “Shared ownership tenancy” is defined in Reg 2 as:

    (a) in relation to England and Wales, a 1lease granted on payment of a
    premium calculated by reference to a percentage of the value of the
    dwelling or the cost of providing it;
    (b) in relation to Scotland, an agreement by virtue of which the tenant of a
    dwelling of which he and the landlord are joint owners is the tenant in
    respect of the landlord’s interest in the dwelling or by virtue of which the
    tenant has the right to purchase the dwelling or the whole or part of the
    landlord’s interest therein;

    Reg 12(2)(a) forbids payment of HB to cover payments under a long tenancy, unless its a shared owneship tenancy. Reg 2 amended the definition of a shared ownsership tenancy from 1 October 2007, and I think the amendment could well mean that the tenancy in the present case is a shared ownership tenancy.

    #88864
    Anonymous
    Guest

    Thanks for the replies, I was leaning towards thinking that this was actually a long tenancy but was also included for HB as it was shared ownership but the definition of shared ownership is so vague and strange that it gives me headache just reading it and was hoping someone might know if there was any reason why one of these arrangements may or may not be shared ownership. Thanks 😀

    #88865
    Anonymous
    Guest

    My feeling is thyat it would only be a shared ownership lease if the premium had been paid to the landlord, as in the classic housing association model. In other words, where the tenant has bought the shared ownership lease from the landlord.

    The arrangement with HSBC seems to be a straightforward long lease – therefore the claimant will only be able to get help with this through the less generous IS/JSA/ESA/SPC housing costs. From a policy viewpoint that makes sense: the rent is performing the function of mortgage interest in a manner that is compliant with Islamic law and the claimant is put in the same position as an owner occupier with a mortgage for benefit purposes.

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