Speaking to Mortgage Solutions, Malik (pictured) said: “There aren’t that many networks that have those [Sharia-compliant] permissions.” 

He added: “Ideally, what we want to see happening is for networks to be more comfortable in applying for the permissions.” 

Malik also said Offa was willing to provide this to networks and advisers, adding: “We will happily – from our own resources – train them, and provide them with the materials they need.

“It’s not massively difficult for them to do it and we’re happy to provide that at our own cost.” 

He said this would be particularly useful for brokers operating in areas like London, Birmingham, Manchester, Leeds, Watford, Slough and Bradford, where there are a lot of Muslims. 

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Extensive knowledge of Islamic finance 

Malik and Sultan Choudhury OBE, executive chair of Offa, both have a deep experience with Islamic finance in the UK as they were involved in the launch of the first Islamic bank here – Islamic Bank of Britain – and launched the first Islamic buy-to-let (BTL) solution. 

Choudry has two honorary doctorates for his services to Islamic finance and Offa’s CFO Amir Firdaus was involved in the first Islamic sukuk, a bond that is like a residential mortgage-backed securitisation (RMBS). 

Malik said Offa expected at least half of its business to come from intermediaries and welcomed any “curious brokers” to work with them. 

He said the firm also wanted to do new things and expand into other areas of finance and properties in order to “grow aggressively”. 

Malik said Offa had “very large ambitions” that were shared by its providers, backers and shareholders. 

 

Changing perceptions 

Offa’s proposition falls under the home purchase plan product type, where the finance firm buys the property with the customer, has its name on the title deed and sells the property back to the customer for the price paid. 

It sets up a second title, called a lease, making the customer effectively a tenant who pays rent. That is how the company makes its profit. This is known as diminishing or reducing partnership. 

Malik said it was a well-established type of financing, but Offa’s launch of a paperless BTL solution had given the product a “new lease of life” as Islamic finance had a poor reputation. 

In the past, customers complained about slow decision-making, the “excessive” and “unnecessary” documentation needed, and the complication in needing two lawyers during the conveyancing process. 

“At one point in the UK, Islamic property finance [was] the most complained-about product,” Malik added.

As a practising Muslim who only uses Islamic finance, Malik described himself as the “typical Offa customer”. However, considering past processes, he said: “A lot of customers feel like they have been penalised for trying to practise their faith and that’s just unfair.

“Customers regardless of their faith should be able to take out a product [that] meets their faith requirements but does not penalise them with a poor service.” 

He said it got to a point where estate agents did not want to deal with customers who used Islamic finance. 

Malik said he knew something had to change and when he launched Offa, and his “number-one mission was to launch buy-to-let and hopefully other types of property finance that [are] in line with the wider market”. 

Offa’s establishment as a bridge finance provider helped, Malik said, as this part of the market is known for its speed. 

Now, Offa can accept applications with no documents and Malik said the feedback received had been “phenomenal”. Additionally, some customers can get an auto decision with underwriting and go straight to the valuation process. 

The business has also removed the need for two lawyers to make the process smoother and more in line with the mainstream market. It is planning on launching automated valuation models (AVMs) capabilities in the future to enable instant offers. 

 

An ethical foundation

Malik said these updates would make Islamic finance a more viable option, pointing out the product was not just for Muslims, as 44% of Offa’s customers were not of the faith. 

He said the fact that no interest was charged, as well as Offa’s ethical credentials, also appealed to customers. 

“We refuse to invest in anything related to armoury, weapons, pornography, alcohol, gambling and animal testing. A lot of non-Muslim customers can relate to that; they want to know they haven’t helped to fund a bullet,” he added. 

Offa caters to British expats in the Gulf Cooperation Council (GCC) in the Middle East, Brunei, Australia, New Zealand, Canada, Singapore, and EEA countries. 

He said these customers wanted to use Offa as it understood the way salaries were paid in these countries. 

Islamic finance could inspire innovation in the sector, Malik said, adding that Offa was working with regulators and legislators behind the scenes to allow them to get access to cheaper funding and structure products in a better way. He said this would improve its product offering, potentially lead to favourable pricing and “naturally, there will be a lot more interest from customers”. 

“We want to get to a point where it becomes a mainstream product and influences conventional banks,” Malik said. 

In his 20 years of experience in Islamic finance, Malik said the regulator had already taken inspiration from the sector, as before the mortgage market review, these banks did not allow brokers to underwrite mortgages and made sure finance was affordable for the customer. 

Under Islamic finance rules, it is required to not put customers in a situation where they are being oppressed, Malik added. 

“We don’t want to put them in a situation where they’ve been forced to repossess, so we did this with checks [that] we felt were above and beyond what the regulator required at the time. Lo and behold, the mortgage market review (MMR) came in 2014 and that became the norm,” he said. 

It is also a principle of Islamic finance not to make a profit from customers being in financial difficulties, so fees on missed payments are only charged to cover administration costs and often just one penalty is issued. 

Malik said: “Why add to the pain they have?” 

Again, Malik noted that the regulator was trying to manage this with conventional non-Islamic lenders. 

If Offa finds money has been made from missed payments, it donates this to charity at the end of the financial year. 

Malik said, like any other business, Offa’s motivations were commercial, but it would “never put commercial gain above our ethics, our values and our faith”. 

“Even if that means forgoing profit, or not launching a product [that] would be more profitable,” he added. 

 

Being charitable

Malik said sustainability was embedded in the doctrine of Islam, as was the concept of perpetual charity. This is where an act done today should continue to benefit future generations. 

“Us Muslims have been told mankind are stewards of the earth, which means it is our responsibility to look after the planet,” he said. 

Offa’s directors are all involved in charity, either as trustees, members of boards or through volunteering. 

It gives employees a paid day off each year to do charity work, but Malik said that “in reality, they end up doing more”. 

“I’ve been involved in charities involved in adoption and fostering. Some of our members are involved in providing food and shelter for poor people in the UK; we’ve worked with a charity that helped people affected by the Grenfell tragedy,” he said. 

As for the perception some people may have of Islam, Malik said, “one of the reasons for discrimination was ignorance” and the cure to that was education and awareness. 

He also said launching attractive products would raise awareness about Offa and, through that, people would be educated on its values and morals. 

Malik said: “Hopefully people will be able to support the change we’re looking to make, not just within our firm for our customers, but generally for the rest of society as well.”