Lawyers welcome Budget relief from stamp duty

ISLAMIC MORTGAGES: rule change 'will boost housing market'

Lawyers this week welcomed a Budget pledge to cut punitive stamp duty charges on Islamic mortgages, claiming that a huge untapped market is ready to use these financial products.

Islamic mortgages structure repayments through a lease-based arrangement in such a way that no interest is paid on a principal sum.

This involves more transfers of the property than would take place with a usual mortgage, incurring more charges to stamp duty.

In the Budget, Chancellor Gordon Brown announced that this year's Finance Bill will include provisions removing additional stamp duty costs incurred in alternative mortgages products.

Mohammed Paracha, an assistant with City firm Norton Rose who has been working with Inland Revenue to devise reliefs for such mortgages, said: 'The reliefs announced will be welcomed by Muslims and other customers in the UK.

Once the alternative property finance arrangement reliefs come into effect, all customers seeking mortgages in the UK will have access to an alternative way in which they can purchase property.

This concept may even be attractive to customers other than Muslims, thereby opening up the potential market even further.'

Meanwhile, the Law Society has called for urgent consultations on the government's proposed new methods for stamp duty payments.

Welcoming Budget proposals to impose a 1% stamp charge on leases and to shield investors in property companies from stamp duty, Law Society chief executive Janet Paraskeva added: 'We would urge the government to renew its consultation process as a soon as possible to allow the best chance of ensuring this legislation is workable in practice.'

Jeremy Fleming