Please note whilst every effort has been made to ensure the accuracy of the information provided, it is not to be relied upon as legal nor financial advice and the reader is invited to contact our offices in respect of individual cases.
Blakewater Solicitors accept no responsibility for actions undertaken by readers in reliance upon the contents of this website.
There are currently four main products available on the open market for which Blakewater Solicitors provides legal services:
• HSBC Amanah Home Finance - provided by HSBC Bank Plc.
• Alburaq - provided by Bank of Ireland in partnership with Arab Banking Corporation (ABC).
• Manzil - provided by Ahli United Bank.
• Home Purchase Plan - provided by Islamic Bank of Britain.
There are two main types of Shariah compliant finance:
• Ijara - the Bank purchases the property and grants a lease to the customer. (Manzil)
• Diminishing Musharaka - the same as Ijara but with the added protection of a Trust. Each month when a payment is made the proportions in which the property is held alters accordingly. (Amanah, Home Purchase Plan and Alburaq)
Loan to Value
The amount the banks will lend differs as follows:
• Amanah - 90%
• Alburaq - 90%
• Manzil - 83%
• Home Purchase Plan- 80%
Fees
The procedure regarding payment of the Bank's legal fees are as follows:
• Amanah - only the legal disbursements incurred by the Bank's Solicitors are deducted from the finance amount.
• Alburaq - the legal fees and disbursements incurred by the Bank's Solicitors are deducted from the finance amount.
In addition we must provide the Bank's Solicitors with an Undertaking to pay their legal fees whether or not the matter proceeds to completion.
Therefore we must request funds from the client at the outset so that we may provide the Undertaking. The Bank's Solicitors will not deal with the matter until they receive the Undertaking from us.
• Manzil - The Bank's Solicitors deduct their legal fees and disbursements from the finance amount.
• Home Purchase Plan - The Bank's Solicitors deduct their legal fees and disbursements from the finance amount.
In all cases Customers do not appear to be advised of these fees upon application of the loan by the banks and therefore there is great resentment later. Perhaps greater transparency of fees is required at application stage.
Products Available
• Alburaq and Manzil offer Buy to Let products.
• Amanah does not currently offer a Buy to Let product.
• Home Purchase Plan - still in negotiation.
Insurance
• Amanah - The Tenant is free to insure the property with any insurer as long as the policy complies with the Bank's requirements.
• Alburaq - The Bank insures the property and recoups the premium from the customer through the monthly repayments.
• Manzil - The Bank insures the property and recoups the premium from the customer through the monthly repayments.
• Home Purchase Plan - The Tenant must insure the property.
Rent rate reviews
• Amanah - quarterly.
• Alburaq - every 6 months.
• Manzil - annually.
• Home Purchase Plan - every 6 months.
Sale of Property
• Amanah - can sell at any time.
• Alburaq - no sale allowed in first 12 months.
• Manzil - can sell at any time.
• Home Purchase Plan - can sell at any time.
Documents required and witnessing requirements
• Amanah - Assignment, Trust, Lease, Legal Charge, Promise to Sell, Promise to Buy, Home Finance Letter.
There are 7 documents in total that need to be signed by the customer; the documents must be witnessed by a Solicitor, Legal Executive or Licensed Conveyancer.
• Alburaq - Lease, Legal Charge, Diminishing Ownership Agreement, Offer Letter.
There are 4 documents in total that need to be signed by the customer and they do not need to be witnessed by a Solicitor. They just need to be signed as a Deed. The witness can be anybody.
• Manzil - Offer Letter, Lease and Agreement, There are 3 documents only. They do not need to be witnessed by a Solicitor. However, the customer's Solicitor must provide written confirmation to the Bank's Solicitor that they have advised the customer about the finance.
• Home Purchase Plan - Diminishing Musharakah Agreement, Lease, Service Agency Agreement and Legal Charge. The documents must be witnessed but the witness does not need to be a Solicitor.
Pre-Completion Procedure
• Amanah - The engrossment documents are sent with the Offer Letter. Although there are a lot of legal documents to be signed, the other documents that the Bank's Solicitors require sight of are minimal. In addition the items they require can be sent to them in a piecemeal fashion.
• Alburaq - Alburaq's Solicitors will not send us the engrossment legal documents until we have sent them all items on their checklist. Bank of Ireland requires five working days notice to release funds. The delays lead to customer dissatisfaction.
• Manzil - The engrossment documents are sent with the Offer Letter. The checklist is lengthy but may be dealt with in a piecemeal fashion. Ahli require three days notice to release funds.
• Home Purchase Plan - to be confirmed.
Post Completion Formalities
• Amanah - The customer's Solicitors must register the Lease, Legal Charge and Promise to Sell.
• Alburaq - The Bank's Solicitors register everything themselves, then provide confirmation by way of up to date office copies once it has been done.
• Manzil - The Lease to the customer is only for seven years and therefore is not intended to be registered. The customers Solicitors may register the Lease as a Notice against the Bank's Title.
• Home Purchase Plan - to be confirmed.
Blakewater Solicitors
Third Floor - Castleway
Business Centre
49-51 Preston New Rd
Blackburn
Lancashire
BB2 6AE
DX: 17961 Blackburn
Tel: 01254 261515
Fax: 01254 261527
Registered in England
& Wales No. 5930912
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