WANT TO SELL YOUR HOUSE FAST?

WANT TO SELL YOUR HOUSE FAST?

                                       THEN, GET YOUR HOUSE IN ORDER

by    Arshid Idris    Solicitor    15^th February 2012

Sellers of property often feel that the process of selling their house doesn’t move fast enough.

There may be a variety of reasons why a sale doesn’t progress quickly. Most of these can be overcome by doing the ground work I recommended in my blog of 15.12.11.

There are also some further, simple steps that a seller can take to speed up the selling process. These include the following:-

1. Energy Performance Certificate (EPC)

Home Information Packs (HIPS) are, of course, no longer required but an EPC is required in all cases and is readily available from a variety of Energy Assessors. Many sellers do not have an EPC for their property to hand over their solicitor at the start of the transaction.

2. Planning Consents, Building Regulations Approval

& Completion Certificate

Almost every property has undergone alterations requiring approval. This includes electrical work and gas installations such as a new boiler as well as double glazed windows and conservatories. Yet it is surprising that few sellers have the necessary paperwork.

This has given rise to a huge increase in indemnity insurance policies being taken out, usually at the expense of the seller. Not only does the seller incur the expense but the transaction is also held up as the lawyers often argue over the issue. It is worth stating that an indemnity policy is never as good as the approval which it is intended to make up for.

3. Guarantees

The originals of all guarantees should be provided by the seller to his solicitor at the start of the transaction. Of course, the buyer will need the original guarantees on completion of the sale so that a claim can be made if necessary.

4. Existing Indemnity Insurance Policies

Likewise, if you as a seller have any indemnity insurance papers for your property, it will help to save time by providing the papers to your lawyer right at the beginning.

Conclusion

All of this may seem obvious yet it is surprising how often the absence of these documents can and does cause delay in the sell.

As always, good preparation wins the day.      

Click here for more information 

Email: 

WELCOME TO THE WORLD OF ISLAMIC FINANCE

WELCOME TO THE WORLD OF ISLAMIC FINANCE

By  Arshid Idris   Solicitor  2nd February 2012       

In our property department, we have been acting for people buying their homes with Islamic finance (IF) for many years.

I recently came to know that Faizal Manjoo was in the area, so I asked for a meeting with him. I was very excited when he agreed as it was an opportunity to learn more about this fascinating, though complex topic. 

Originally from South Africa, Faizal Manjoo is a rare breed in that he is qualified both as an Islamic scholar and as a solicitor. He is now based in the UK and is presently studying for his PHD at Markfield Institute of Higher Education where he is a lecturer and researcher in IF. He is also a consultant to one of the magic circle of law firms in the city of London. I found him to be a man gifted with a sharp mind and a great thirst for knowledge and learning.

Arshid Idris:  What is IF and how does it differ from other types of finance?

Faizal Manjoo: IF is part of the Islamic economic system. Islamic finance has spread in three main areas: Islamic banking, Islamic insurance (Takaful) and the Islamic capital market.

IF differs from conventional finance in 3 key aspects. First “Riba”, which is interest. Then, there is “Gharar” which means excessive uncertainty. Thirdly, there is “Maysir” which includes gambling and the like. You will find some or all of these in conventional finance but they are prohibited in IF.

The sources of IF are the Quraan and Sunnah (the practice of the noble prophet Muhammad, who himself was a successful merchant). Hence, Islamic financial contracts are highly regulated. Accordingly, with IF, the contracting parties do not have the absolute freedom to contract on whatever terms they want so far as the financial terms are concerned. Whereas in conventional financing any type of product can be structured even though it can be ethically wrong.

Essentially, IF is designed to prevent economic unfairness.

Arshid Idris:  Are there any advantages of using IF?

Faizal Manjoo: Yes, there are several advantages, including that IF is more socially responsible. For example, “Zakat”, which is an Islamic levy aimed at alleviating poverty. 

IF is more ethical – an Islamic bank will not finance an operation such as a casino.

IF gives economic identity to the Islamic community.

Significantly, Islamic banking for instance offers mainly asset – backed products which have intrinsic value and not debt-backed products (money for money), as is the case with conventional finance.

Arshid Idris:  Is IF available to everyone?

Faizal Manjoo: Yes, IF is available to the whole community regardless of faith, as long as the finance is used according to Islamic principles.

Arshid Idris: Can you please explain about IF in relation to the purchase of land and property?

Faizal Manjoo: Unlike conventional finance, IF is designed to delay immediate outright ownership for the customer as IF requires that the bank takes the risk of the property until ownership is transferred to the customer.

There are presently two main schemes available.  The first involves the bank buying the property and leasing it to the customer with an option for the customer to buy the property after a set term. This is known as “ijarah wa iqtina”. So the bank bears the risk attached to ownership until all the rentals are paid for a set number of years. After that the client is given an option to buy the property or house at a far lesser price than the market rate. This product is different from higher purchase which includes two contracts in one contract. 

The other scheme involves a shared ownership between the bank and the customer. This is known as a “diminishing partnership” or “mushrakah mutanaqisah”. Both the bank and the customer contribute equity towards the property and the bank holds a bigger share in the beginning as it is financing the said property. Hence the bank initially owns the bulk of the equity. The customer who would reside in or use the said property will pay rentals for benefiting from the share of the bank in the property. Part of the rental paid will technically be considered as an investment towards buying the share of the bank over a certain period of time. Mathematically the share of the bank decreases with the passage of time due to the rental paid and the partial transfer of ownership. Over a certain period of time, the entire share of the bank is transferred to the customer. Often a trust is used for such a product to protect both the client and the bank.

Also, there was a model developed in the early 1980’s called the “Murabah”. This is technically a sale with a deferred payment facility whereby the bank will buy the property and then sells it to the customer on a deferred payment basis. The cost price and profit are known to the client. The customer will then pay by instalments over a period of time. However, the disadvantage of this model is that according to the Islamic law of contract, the sale price cannot be adjusted. Once a commodity is sold, the price cannot be changed. Hence there is no roll-over as in the case of a debt-financing transaction. This is not in favour of the bank.

Arshid Idris:  How do you see IF developing in the foreseeable future?

Faizal Manjoo: IF is expanding very fast at a consistent rate of 15%.

The IF market is worth 1trillion dollars presently and is expected to hit 4 trillion dollars in 4 years time. So it is clear there is an increasing market demand for IF, especially, in the emerging economies and in the Muslim world. The exponential growth can be explained by the awareness being created in the community and also a rise in the middle-class populace in many Muslim countries.

The conventional finance markets have suffered very badly since the 2008 credit crunch but hardly any IF activities were affected because IF is not based on debt or other toxic assets. This shows that IF is a very resilient product. 

Click here for more information 

Email:

info@idrissolicitors.co.uk