Because financing housing is therefore going to be too expensive, Islamic financial institute Bilaa-Riba has decided to close down. “We had adjusted our product for the tax service twice, but it continue to think that the mortgage interest deduction is not applicable to our mortgage,” according to disappointed spokesperson Hakima Dini.
“We we introduced the idea for the halal mortgage three years ago, we had got thousands of requests for information. Sadly we couldn’t help these people to good housing financing.”
Every day the tax service receives submissions from financial institutions to test against the law and will not comment on individual cases.
Three quarters of the Muslims who currently rent a house will buy a residence if there would be a mortgage that complies with the Koran regulations [ed: it’s unclear where this figure comes from]. The essence of halal mortgage is that investors or Muslim funds buy a house and then sell it on to the customer with a profit. The customer then pays a higher sum in installments, without interest. According to the Koran it’s not a sin to make a profit, but it is if the profit comes in the form of interest.
In 2006 the VVD party asked for halal mortgages. Minister Bos (Finance) promised last year to investigate the possibilities for Islamic banking.
Source: Telegraaf (Dutch)