The Canadian government, under Prime Minister Justin Trudeau’s leadership, is actively exploring avenues to expand access to financing alternatives, including the introduction of halal mortgages. This initiative reflects Trudeau’s commitment to aiding Canadians in their pursuit of homeownership, with a specific emphasis on meeting the needs of the Muslim community.
In its Budget 2024 announcement, the government stated its intention to consider alterations in the tax treatment of these products or the establishment of a new regulatory sandbox for financial service providers. It underscored the necessity of ensuring adequate consumer protections alongside any potential changes.
The Islamic faith regards the charging of interest as a form of usury and deems gains derived from interest as unjust. Similarly, other Abrahamic faiths, such as Judaism and Christianity, also view usury as a sin.
However, financial institutions operating in the Islamic world distinguish themselves by offering mortgage and lending products that circumvent conventional interest payments.
In Canada, certain financial institutions already provide mortgages compliant with Islamic law. However, none of the country’s five “Big Banks” currently offer such products.
In its budget document, the Canadian government has announced a two-year prohibition on foreign investors purchasing residential property, effective from January 1, 2023. The government asserts that this measure aims to safeguard housing for Canadian residents, rather than allowing it to become a speculative asset class for foreign investors.
According to the budget proposal, the government has announced its intention to prolong the ban on foreign purchasing of Canadian homes by an additional two years, until January 1, 2027. The document further states that foreign commercial enterprises and individuals who are not Canadian citizens or permanent residents will remain prohibited from acquiring residential property in Canada.
Deputy Prime Minister and Finance Minister Chrystia Freeland presented a housing-focused budget on Wednesday, projecting a deficit of $39.8 billion for fiscal 2024-25. The budget includes $53 billion in new spending over five years.
Most of the new spending, previously announced, prioritises generational fairness and support for younger demographics, particularly Millennials and Generation Zs. This includes programmes aimed at assisting renters and first-time home buyers.
The government plans to partially offset this spending through what it terms “tax fairness measures,” which are expected to generate an additional $18.2 billion in revenue over five years.
Image source: Reuters
