Islamic Mortgages and Home Finance Under the Law of Real Property in England and Wales

Abstract

This doctoral thesis aims to define Islamic mortgages within the framework of land law and to distinguish this term from other Islamic home finance arrangements. It provides a comprehensive examination of the key components of Islamic mortgages and uncovers their true legal identity. The principal objective of the thesis is to determine whether an Islamic mortgage satisfies the property law definition of a legal mortgage and whether the term ‘Islamic mortgage’ accurately encompasses all other forms of Islamic home finance. To achieve this, the thesis proposes definitions of Islamic mortgages and other Islamic home finance models within both property law and financial regulation. Additionally, it juxtaposes the Islamic mortgage against both property and finance law to illustrate its versatility and dual identity. The research scrutinises the various forms of Islamic home finance, highlighting the advantages and disadvantages of each. The Islamic mortgage presents itself as a viable alternative to the ‘English mortgage’—a term that, in this thesis, refers to the conventional residential mortgage used in England and Wales. This is particularly relevant for mortgaging parties who seek a Sharīʿah-compliant option for religious reasons, such as avoiding interest-based lending. The thesis finds that if Sharīʿah were a binding legal system in England and Wales, borrowers would not benefit beyond what they currently receive under the common law. The scope of lender obligations remains a grey area under Islamic law, requiring expert interpretation of the Qur’ān and Sunnah, the two primary sources of Sharīʿah. By contrast, Islamic law clearly defines the borrower’s strict obligation to repay debt. The research also reflects on the legal fiction embedded in the English mortgage, which is then incorporated into the legal charge by which Islamic mortgages are currently created. This discussion brings attention to the now-retired mortgage by demise and prompts readers to consider how English and Islamic mortgages might have evolved had the mortgage by demise not been abandoned. The mortgage by demise previously created an inverse ‘tenant-mortgagor and landlord–mortgagee’ relationship, whereas contemporary Islamic home purchase plans in England and Wales reflect a more organic lender-borrower dynamic. Ultimately, under the law of England and Wales, both the Islamic and English mortgages (i.e. the ‘charge by way of legal mortgage’) are legitimate constructions stemming from the common-law mortgage.