For homebuyers in the UK who seek a faith-aligned or ethical route to property ownership, conventional mortgages pose a challenge due to the use of interest (Riba), which is prohibited in Islamic finance. A Home Purchase Plan (HPP) offers a Sharia-compliant alternative that is fully regulated and increasingly accessible across the UK property market.
At Fraser Bond, we guide clients through the Home Purchase Plan process from start to finish, ensuring each step complies with both UK regulatory frameworks and Islamic finance principles.
A Home Purchase Plan is an interest-free, asset-based method of buying property. Rather than lending money and charging interest, the bank and the buyer enter into a co-ownership and lease agreement. The buyer gradually purchases the bank’s share while paying rent on the portion still held by the bank. Ownership transfers fully to the buyer once all payments are complete.
This structure enables property acquisition that is both Sharia-compliant and legally recognised under UK law.
No interest is charged at any stage of the agreement
The arrangement is based on co-ownership of a real asset
Pricing and terms are transparent and agreed in advance
Risks and benefits are shared between buyer and provider
All contracts are certified by Islamic scholars and regulated by the FCA
Property Selection
The buyer chooses a residential property. The finance provider assesses its eligibility and value.
Joint Purchase
The provider and buyer jointly acquire the property. The buyer contributes a deposit (typically 20 to 30 percent).
Lease and Buy-Back Arrangement
The buyer leases the provider’s share and pays monthly rent. Simultaneously, they purchase additional shares in the property over time.
Ownership Transfer
Once all shares are bought, full legal ownership of the property is transferred to the buyer.
Diminishing Musharaka
This is the most widely used model. The buyer gradually acquires the bank’s equity in the property, reducing rent over time as their ownership increases.
Ijara (Lease-to-Own)
The bank retains ownership throughout the lease period. The buyer pays rent and receives full ownership at the end of the term. This model is used less frequently.
Murabaha (Cost-Plus Sale)
The bank buys the property and sells it to the buyer at a fixed profit. This model is typically used for shorter-term purchases or investment purposes.
Gatehouse Bank
An FCA and PRA-regulated provider offering HPPs to UK residents, expats, and self-employed individuals. Green home discounts are available for energy-efficient properties.
Al Rayan Bank
One of the UK’s longest-established Islamic banks. Offers residential and Buy-to-Let HPPs with flexible income criteria and competitive terms.
UBL UK and Ahli United Bank
Offer Murabaha-based financing through authorised intermediaries. Suitable for high-value and investment transactions.
To qualify for a Home Purchase Plan, most providers require:
UK residency or appropriate visa status
A deposit of 20 to 30 percent
Verified income and affordability assessment
Property located in England or Wales
Acceptable credit profile
Fraser Bond helps clients determine eligibility, structure documentation, and liaise with certified Islamic finance solicitors.
Fraser Bond provides full-service support for clients seeking ethical, interest-free property solutions:
Guidance on the right HPP structure for your needs
Matching buyers with FCA-approved Islamic lenders
Identifying eligible properties in London and across the UK
Ensuring compliance with Sharia and UK legal standards
End-to-end coordination with lenders, legal teams, and surveyors
Whether you are a first-time buyer or investor, we ensure your property journey aligns with your financial and faith values.
A Home Purchase Plan offers a secure and transparent path to property ownership without interest. If you are looking for a Sharia-compliant mortgage alternative in the UK, Fraser Bond is here to help.
Visit FraserBond.com to speak to one of our advisors and begin your Halal home finance journey today.
