The Canadian government is exploring options to broaden access to financing alternatives, including halal mortgages. This initiative is part of Prime Minister Justin Trudeau’s efforts to support Canadians aspiring to become homeowners, with a particular focus on the Muslim community.
Trudeau to introduce Halal mortgage for Muslims
In the recent federal budget, the Liberal government revealed that it has initiated consultations with financial services providers and various communities. The goal is to better understand how federal policies can cater to the diverse needs of Canadians seeking home ownership.
Canada Budget 2024 announces, “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.”
What are Halal Mortgages?
Halal mortgages are compliant with Islamic law, which prohibits the charging of interest, considering it a form of usury. While other Abrahamic faiths, such as Judaism and Christianity, also view usury as a sin, Islamic financial institutions uniquely offer mortgage and lending products that avoid conventional interest payments.
Although some Canadian financial institutions already offer Islamic law-compliant mortgages, none of the country’s five major banks currently provide them. Experts believe, these alternative mortgages might not be entirely interest-free but could involve regular fees as substitutes for interest charges.
Many on social media called it a ‘woke idea’ that intends to benefit one section of the society, “Religious financial products with different tax treatment? What?,” wrote Paul Mitchell.
Canada imposes 2 year ban on foreign investors to buy home
In its budget document Canada government has 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
In the budget proposal, “the government announced it intends to extend the ban on foreign buying of Canadian homes by an additional two years, to January 1, 2027.”
“Foreign commercial enterprises and people who are not Canadian citizens or permanent residents will continue to be prohibited from purchasing residential property in Canada,” budget document stated.
Canada Budget: Key highlights
In the housing-focused budget presented by Deputy Prime Minister and Finance Minister Chrystia Freeland, the government projected a deficit of $39.8 billion for fiscal 2024-25. This budget includes $53 billion in new spending over the next five years, with a significant portion aimed at ensuring generational fairness and assisting younger Canadians, specifically Millennials and Generation Z, through programs for renters and first-time homebuyers.
To partially offset the new spending, the government introduced “tax fairness measures,” which are expected to generate an additional $18.2 billion in revenue over the next five years.