UC+ islamic mortgage

yeovalley

I've been given two section 21 notices in the past two years and it's been a very frustrating time. I know that universal credit gives the rent share for the shared ownership scheme but I was wondering if they would also do that in the case of a Muslim mortgage provider who also charge a rent for the portion that isn't owned. For example, I own 20% in the property, I will be charged rent for 80% of the property. Is this allowed? None of the rent payment goes towards my own share ever. But like shared ownership, I can buy more of the property and accordingly the part I need to pay rent on reduces. This is because I can't take a traditional mortgage due to the area I'm in.

Any thoughts, would UC front the rent part? Does anyone know?

Oneplanetonelife

Do UC pay rent and part of the mortgage on shared ownership?

Newcad

Yes, UC-HE can be paid towards the rent part of a shared ownership.

https://england.shelter.org.uk/professional_resources/legal/home_ownership/shared_ownership_housing_rights#housing-benefit-and-help-with-housing-costs

Who the mortgage holder is (and what religion they may be) is irrelevant to the DWP.

yeovalley

Newcad said:

Yes, UC-HE can be paid towards the rent part of a shared ownership.

Who the mortgage holder is (and what religion they may be) is irrelevant to the DWP.

Thanks for that! My understanding was that shared ownership was a separate government regulated scheme which is why I am doubtful as to whether or not UC will pay the rent element. 

marcia_

Oneplanetonelife said:

Do UC pay rent and part of the mortgage on shared ownership?

 They will make payment if eligible towards the rent part not the mortgage. 

yeovalley

marcia_ said:

Oneplanetonelife said:

Do UC pay rent and part of the mortgage on shared ownership?

 They will make payment if eligible towards the rent part not the mortgage. 

Thank you, but is that just restricted to a government scheme of shared ownership or will it work in the case of Al Rayan bank's mortgage? 

DullGreyGuy

Does the government actually consider it "rent"? 

For some it's a bit of a fudge to call it "rent" rather than interest. With Diminishing Musharakah you are paying "rent" and repaying the lump sum whereas with Ijara you are just paying "rent", ie the first is a repayment mortgage and the second is an interest only mortgage. Some the capital repayment is optional during the term of the mortgage. 

Certainly with other maters rules have been put in such that its treated as if it were a normal mortgaged property like with stamp duty where you dont pay anything when the bank gifts you their share or with a Murabaha they consider it a single sale rather than a sale to the bank and a sale to you at an uplifted value. 

The DWP will give a Mortgage Interest Support loan for those with islamic mortgages so they clearly there are considering the "rent" as interest. 

kaMelo

yeovalley said:

marcia_ said:

Oneplanetonelife said:

Do UC pay rent and part of the mortgage on shared ownership?

 They will make payment if eligible towards the rent part not the mortgage. 

Thank you, but is that just restricted to a government scheme of shared ownership or will it work in the case of Al Rayan bank's mortgage? 

The nature of the mortgage, traditional with interest or Sharia compliant, does not make a difference. Support for rent will only be paid to cover the share that you don't, or will never) own. Sharia compliant mortgages are more akin to a hire purchase agreement in that at the end of the agreement you own whatever you have been paying 'rent' on. UC will offer no help towards these repayments.
Help could be provided on these repayments through an SMI loan if you qualified, however, as an interest bearing loan one would assume someone taking out a Sharia compliant mortgage would not be interested in the scheme.

yeovalley

Thanks both! 

Follow-up: does this mean that with the ijara type of mortgage, I would get the housing element from UC? 
Sorry if it's still not clear to me

poppy12345

You can’t claimed housing costs for a mortgage. For mortgage it would be SMI interest only and it’s just a loan. 

marcia_

kaMelo said:

yeovalley said:

marcia_ said:

Oneplanetonelife said:

Do UC pay rent and part of the mortgage on shared ownership?

 They will make payment if eligible towards the rent part not the mortgage. 

Thank you, but is that just restricted to a government scheme of shared ownership or will it work in the case of Al Rayan bank's mortgage? 

The nature of the mortgage, traditional with interest or Sharia compliant, does not make a difference. Support for rent will only be paid to cover the share that you don't, or will never) own. Sharia compliant mortgages are more akin to a hire purchase agreement in that at the end of the agreement you own whatever you have been paying 'rent' on. UC will offer no help towards these repayments.
Help could be provided on these repayments through an SMI loan if you qualified, however, as an interest bearing loan one would assume someone taking out a Sharia compliant mortgage would not be interested in the scheme.

yeovalley said:

Thanks both! 

Follow-up: does this mean that with the ijara type of mortgage, I would get the housing element from UC? 
Sorry if it's still not clear to me

 The post above looks like a no