The Canadian government has announced plans to introduce halal mortgages, catering to the specific needs of the Muslim community and expanding access to financing alternatives to support homeownership aspirations. This initiative aims to foster diversity in the housing market while addressing the unique requirements of Muslim Canadians.
As part of its annual budget, the government will implement a two-year ban on foreigners from buying land in the country, highlighting its commitment to creating alternative financing products. The federal budget for 2024 outlines the government’s intention to engage with financial services providers and various communities to understand how federal policies can be improved to accommodate Canadians seeking homes.
Consultations, initiated in March 2024, will explore changes in the tax treatment of alternative financing products, with the establishment of a regulatory sandbox for financial service providers. The government aims to strike a balance between facilitating access to alternative financing options and ensuring robust consumer protections.
Halal mortgages, adhering to Sharia principles, offer payment structures that exclude interest. Three common types of halal mortgages include ijara, Musharaka, and Murabaha. Ijara operates on a rent-to-own model, Musharaka involves a partnership between the financier and the customer, and Murabaha employs a credit system incorporating profits into the final offer.
Currently, major Canadian banks do not offer halal mortgages, leaving many Muslims reliant on smaller firms for investment and homeownership opportunities. The Liberal government aims to address this gap by exploring measures to expand mortgage policies to include alternative financing options.
Details of the plan are expected to be announced in the fall.
