The demand for faith-based finance models rises among UK homebuyers – Zaman

Factors like strained supply and unaffordable rates leave countless individuals feeling under-served, with 40% of young adults unable to afford to buy one of the cheapest homes in their area.

In and among the growing frustrations is a rising demand for financial products that also align with personal beliefs and values. Today, Islamic finance is leading the charge. Around 7% of the UK population identifies as Muslim, yet only a very small proportion have been able to access home finance that aligns with their needs. Islamic home finance, while not a new concept in its entirety, has often been overlooked due to perceived complexities and outdated notions.

But now, a new wave of Islamic fintech is disrupting the market and bringing Sharia-compliant products to the modern banking standards that the general consumer expects.

Why is demand rising?

With a compound annual growth rate (CAGR) of 11%, the Islamic finance industry is showing how quickly people’s opinions are changing. Even beyond the Muslim population, more people are exploring Islamic finance than ever before. This is because, under certain circumstances, in some profiles, it’s more accessible than conventional products, with criteria allowing gifted deposits and income from up to four applicants being taken into account.

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Islamic home finance avoids interest and instead uses a partnership-based structure. The customer and provider buy the property together, and the customer gradually purchases the provider’s share over time. Profit is generated through rent on the portion of the property the homeowner doesn’t own, rather than interest.

From a broker’s perspective, what really makes a difference is that Islamic providers like StrideUp take the time to work through a case with them and the applicant, looking for ways to make the terms work beyond tick-list-style criteria. Instead of simply relying on scores or rules-based decision-making, brokers find the process far more collaborative, with underwriters often taking a more holistic review within regulatory boundaries.

The global opportunity

As demand increases, offers of non-traditional models like Islamic finance continue to emerge across the world. In regions like the Middle East and South East Asia, large, sophisticated markets have already been established, with Europe now witnessing an accelerated adoption among buyers searching for alternatives to conventional interest-based systems.

Advisers are also finding that providers differ from the traditional Middle Eastern banking subsidiaries that have historically dominated this space. Instead of being restricted by older, less flexible models, some providers have built a more modern, digital approach that is closely connected to the needs and expectations of UK customers, making it easier for brokers to support clients who want an ethical alternative without an added layer of complexity. To make housing markets more accessible on a global scale, brokers need to consider models that lie outside of conventional lending.