Islamic financial systems are founded upon Shariah, the law of Islam. Shariah forbids investment in certain products, such as pornography, alcohol and tobacco.
Shariah also prohibits unjust enrichment without commensurate
effort which encompasses:
- the earning or payment of interest;
- speculation or gambling (maysir); and
- contractual uncertainty (gharar).
Islamic financing techniques seek to create the same outcomes as
traditional products by different means. This can be achieved by
replacing interest payments with rent, sharing profits through an
equity stake, or by the lender buying and reselling an asset at a higher
price on a deferred basis.
Shariah conveyancing
When a property is bought with the aid of Islamic Finance there is a significant amount of additional work for the buyer’s solicitor. They are required to liaise with the bank’s own solicitor, providing details of title, searches and enquiries, and to deal with any queries or special conditions raised by the bank. The buyer’s solicitor must also check the agreement and any lease provided by the bank’s solicitor and advise on the contents of these documents.
How does Islamic finance work?
The overreaching principle of Islamic Finance is that it is interest free through a basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits between them. The terms of the agreement are laid out in writing between the parties and the buyer’s solicitor will advise the buyer on the terms of that agreement.
Our experience
At Birketts, a specialist will be able to guide you through the conveyancing process. Our lawyers are experienced at practicing law that follows Islamic Finance regulations and working with international clients. Our use of technology means that we are an accessible law firm. Bina Salam has acted on behalf of Sheiks, who have a portfolio of hotels, as well as private investors from abroad.
Shariah private client advisory
We have a large team of international private client lawyers who are experienced in drafting Shariah compliant Wills and trusts.
These documents can include bespoke distribution plans, to comply with the teachings of different schools of Islam, specific investment powers to prohibit haram investments and Zakat provisions to facilitate charitable giving both during lifetime and after death.
The team are also well used to liaising with lawyers in other countries to ensure consistency of approach in succession and estate planning matters.
The team also have a detailed knowledge and understanding of the UK’s tax treatment of Shar’ia compliant financing options, so that your position is fully understood when providing advice.
Key contacts
Birketts stand head and shoulders above other firms. We always use them for complex and sensitive work.
Chambers [UK 2023]
The individuals have a can do attitude to resolving a situation rather than presenting hurdles. Friendly, approachable and efficient.
Legal 500 [UK 2023]
