Trudeau’s Move to Introduce Halal Mortgages for Muslims
Prime Minister Justin Trudeau’s administration is embarking on a quest to expand access to various financing options, including halal mortgages, in a bid to support the homeownership aspirations of Canadians, particularly those in the Muslim community.
In the latest federal budget announcement, the Liberal government unveiled its engagement in dialogues with financial service providers and diverse communities, aiming to gain insights into how federal policies can better accommodate the varied requirements of Canadians in pursuit of owning homes.
The 2024 Canada Budget highlights this initiative, stating, “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.”
Understanding Halal Mortgages
Halal mortgages adhere to Islamic law, which prohibits the collection of interest, deeming it as usury. While other Abrahamic religions, such as Judaism and Christianity, also denounce usury, Islamic financial institutions offer mortgage and lending solutions that avoid conventional interest payments.
Despite some Canadian financial institutions offering Islamic law-compliant mortgages, none of the nation’s five major banks currently provide them. Analysts suggest that these alternative mortgages may not be entirely devoid of interest but could involve regular fees as alternatives to interest charges.
The proposal sparked a mixed response on social media, with some labeling it a ‘progressive notion’ designed to benefit a specific segment of society. “Religious financial products with different tax treatment? What?,” questioned Paul Mitchell.
Canada’s Ban on Foreign Investors Purchasing Homes
The federal budget introduced a two-year prohibition on foreign investors purchasing residential properties, effective from January 1, 2023. The government justifies this move as necessary to ensure available housing for Canadians and prevent residential properties from becoming merely speculative assets for foreign investors.
Expanding on this stance, the budget proposal outlines the government’s intention to extend the ban on foreign home purchases for an additional two years, until January 1, 2027. The document reiterates that foreign commercial entities and non-Canadian citizens or permanent residents remain barred from acquiring residential property in Canada.
Key Highlights from Canada’s Budget
Presented by Deputy Prime Minister and Finance Minister Chrystia Freeland, the housing-centric budget forecasts a deficit of $39.8 billion for the fiscal year 2024-25. This budget allocates $53 billion in fresh expenditure over the next five years, with a significant portion directed towards promoting intergenerational equity and aiding younger Canadians, specifically Millennials and Generation Z, through initiatives targeting renters and first-time homebuyers.
To partially balance the increased spending, the government introduces “tax fairness measures,” projected to yield an additional $18.2 billion in revenue over the following five years.
