Canadian Prime Minister Justin Trudeau. Reuters File
With a particular focus on the Muslim community, the Canadian government is exploring options to broaden access to financing alternatives, including halal mortgages.
Part of Prime Minister Justin Trudeau’s efforts to support Canadians aspiring to become homeowners, particularly Muslims, the Liberal government in the recent federal budget revealed that it has already begun consultations with financial service providers and diverse communities “to understand how federal policies can better support the needs of all Canadians seeking to become homeowners.”
“This could include changes in the tax treatment of these products or a new regulatory sandbox for financial service providers, while ensuring adequate consumer protections are in place,” the government announced in its Budget 2024.
The Islamic faith considers the charging of interest to be a form of usury, and considers gains made through interest to be unjust.
Other Abrahamic faiths – like Judaism & Christianity – also consider usury to be a sin. However, financial institutions operating in the Islamic world are unique in offering mortgage and lending products that avoid conventional interest payments.
Mortgages compliant with Islamic law are already offered by some financial institutions in Canada, though none of Canada’s five “Big Banks” currently offer them.
Meanwhile, in its budget document, Canada government has also introduced a two-year ban on the purchase of residential property by foreign investors, effective January 1, 2023. The government claims this has been done to ensure there are homes for Canadians to live in and not as a speculative asset class for foreign investors.
“The government announced it intends to extend the ban on foreign buying of Canadian homes by an additional two years, to January 1, 2027,” said the budget proposal.
“Foreign commercial enterprises and people who are not Canadian citizens or permanent residents will continue to be prohibited from purchasing residential property in Canada,” the document added.
Deputy Prime Minister and Finance Minister Chrystia Freeland tabled a housing-focused budget on Wednesday that included a projected deficit of $39.8 billion for fiscal 2024-25 and includes $53 billion in new spending over five years.
The majority of new spending had been previously announced and puts special emphasis on generational fairness and helping younger people – Millennials and Generation Zs — with programs to help renters and first-time home buyers.
The spending will partially be offset by what the government calls “tax fairness measures,” projected to bring in $18.2 billion in additional revenues over five years.
With inputs from agencies
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