The first loan in France for house purchase in accordance with Islamic law was awarded in May to a “top athlete” to purchase a house in the Paris region. This was revealed by an association that works to promote financing according to Islamic Law.
“We made a first home loan transaction in May,” said Anass Patel, at a symposium on Islamic finance Wednesday in Strasbourg. Mr. Patel is the president of the Association of innovation for economic development and real estate (AIDDIM) which advised the Islamic purchaser how to arrange financing according to Islamic law.
The recipient is a “elite athletes”, who has purchased a house in the Paris region for a “significant amount.” He was willing to be the first customer to advance the development of this “Sharia compliant” product, said Mr. Patel, without revealing the client’s identity.
The loan was granted by BRED. Questioned by AFP, the bank, affiliated to the Banque Populaire Group, declined to comment.
The operation was performed through a mechanism of buying and reselling (“Murabaha”). It consists, of the bank buying the property and reselling it to the client. The latter then reimburses the bank and pays it a commission for the additional service rendered.
The formula is used to avoid the payment of interest which prohibited by Islamic law.
A tax statement clarifying the legal and tax implications was published on August 24. “We anticipated the contents of the tax statement,” Patel told the AFP. Patel, is himself an expert in real estate and an officer of the consulting firm DTZ Asset Management.
“We can say that it is possible to implement Shariah compliant operations (i.e. following the principles of Islamic Law, ed.) in France. Banks can do this kind of procedure,” enthused M . Patel. The residential credit market “halal” in France can be estimated at 7.2 billion euros.
Based on sharia, Islamic finance prohibits the use of interest, speculation and investment in what it considers to be morally unclean activities (alcohol, weapons, pornography, tobacco …).
The development if Islamic financial procedures in France, and more generally in Europe, remains marginal, especially for the general public, except in Great Britain.
The economics minister, Christine Lagarde, has a longstanding commitment to reforms, which may favor the establishment of these laws in France. But adaptation of the legislation is being debated in the government, especially on the left, under the principle of secularism. The secularists are concerned that the bank’s acceptance of a religious rule in his methods will cause discrimination based on religious beliefs. They perceive an attack on secularism which the French republic is based on.