Bolton Business Finance arranges Islamic buy to let mortgages for UK landlords, limited companies and expat investors, using Sharia compliant lenders that charge rent instead of interest.
An Islamic buy to let mortgage, also called a halal buy to let mortgage or a buy to let purchase plan, lets you buy or refinance a rental property through co-ownership with the lender. As at November 2026, finance runs from £60,000 to £1.5 million per property at up to 80% funding to value, with HMOs, multi-unit blocks and expats accepted.
Written by Marcus Wright, owner and founder of Bolton Business Finance Ltd, in financial services since 2008 and a commercial finance broker since 2019. Last reviewed November 2026.
On this page
- How an Islamic buy to let mortgage works
- Lending criteria
- Rental cover
- Limited company and SPV applications
- HMOs and multi-unit blocks
- Expat landlords
- Bridge to let and below market value purchases
- Islamic and conventional buy to let compared
- Points to check before you apply
- Tax and stamp duty
- Who we can help
- How the process works
- Frequently asked questions
The short version
- An Islamic buy to let mortgage is not a loan. You and the lender buy the property together and you pay rent on the lender’s share.
- Your monthly payments can also buy out the lender’s share over time, or you can pay rent only and buy the lender’s share at the end of the term.
- As at November 2026, finance runs from £60,000 to £1.5 million per property and £3.5 million in total, at up to 80% funding to value.
- HMOs and multi-unit blocks go up to 75%. Terms run from 7 to 40 years, or up to 25 years on HMOs and multi-unit blocks.
- Rental cover starts at 125% of the stressed payment, and surplus personal income can top up a shortfall.
- HMRC taxes the rent paid to the lender in the same way as mortgage interest, and stamp duty relief stops a double charge.
| Item | Detail |
|---|---|
| Finance size | £60,000 to £1.5 million per property, £3.5 million in total |
| Funding to value | Up to 80%. HMOs and multi-unit blocks up to 75% |
| Term | 7 to 40 years. HMOs and multi-unit blocks up to 25 years |
| Minimum property value | £80,000. HMOs and multi-unit blocks £100,000 |
| Payment options | Rent plus acquisition payments, or rent only with a repayment strategy |
| Rental cover | 125% to 145% of the stressed payment, with top slicing allowed |
| Borrowers | Individuals, limited companies, LLPs, first-time landlords and expats |
| Larger corporate deals | £200,000 to £5 million at up to 75%, from 10% a year, on terms up to 36 months |
| Locations | England and Wales |
| Our fee | £495 upfront plus 1% on completion |
How an Islamic buy to let mortgage works
An Islamic buy to let mortgage replaces the interest-bearing loan with co-ownership and a lease. Rather than borrowing money, you buy the property in partnership with the lender. If you put in a 20% deposit, you own 20% and the lender owns 80%.
The lender leases its share to you and you let the property to your tenants. Each month you pay rent for the share the lender still owns. On the acquisition basis you also pay towards buying the lender’s share, so your stake grows until you own the whole property. On the rent only basis your share stays the same and you buy the lender’s share at the end of the term, which works like an interest-only buy to let. The lender will want to see a credible plan for that final payment.
The paperwork differs from a mortgage, but the practical result for a landlord is familiar: a deposit, a monthly payment, an initial pricing period and a term of up to 40 years. Pricing depends on the funding to value and the length of the initial period, and we quote it at application. Islamic buy to let is available to landlords of any faith.
Lending criteria
These criteria come from the lender guides current at November 2026. Individual cases can still be referred where something sits just outside them.
| Criteria | Requirement |
|---|---|
| Minimum income | £18,000 a year for at least one applicant |
| Number of applicants | Up to 2 on a personal application, up to 4 on a limited company |
| Age | 18 or over. No maximum if income in retirement covers the payments |
| First-time buyers and landlords | Accepted, including on HMOs and multi-unit blocks |
| UK residency | 6 months for UK citizens, 12 months for non-UK citizens |
| Visas | Indefinite leave to remain or an accepted visa with at least 12 months left. Family visas capped at 65% |
| CCJs and defaults | Satisfied before offer, total under £500 and no more than one default in 36 months |
| Missed secured payments | None in the last 12 months and no more than one in the last 36 months |
| Deposit | Your own funds, or a gift from a family member on a purchase |
| Purpose | Purchase, refinance and capital raising, except to pay tax or fund gambling |
Accepted visas include EU Settlement Scheme settled and pre-settled status, Skilled Worker, Health and Care Worker, UK Ancestry, British National (Overseas) and Intra-company Transfer visas. Income is usually verified electronically, so most applicants need very little paperwork.
Rental cover
Rental cover is the test that decides how much you can raise. The lender divides the monthly rent by the monthly payment at a stress rate, and the result has to clear a set percentage.
The stress rate is your pay rate plus 1% where the initial period is under five years, and the pay rate itself where it is five years or more. Choosing a five-year initial period can therefore lift the amount you can raise.
| Applicant | Rental cover required |
|---|---|
| Basic rate taxpayer, personal name | 125% |
| Higher or additional rate taxpayer, personal name | 140% |
| Limited company or LLP | 125% |
| HMO or multi-unit block | 145% |
| Minimum from rent alone with top slicing | 110% |
Take a flat let at £1,000 a month. A higher rate taxpayer buying in their own name must pass a 140% test, so the stressed monthly payment can be no more than £714. A limited company at 125% can support up to £800 on the same rent. Where the rent falls short, top slicing lets surplus personal income cover the gap, as long as the rent alone reaches 110%. Top slicing is available on personal and SPV applications, including for first-time buyers.
Limited company and SPV applications
Most of the landlords we work with buy through a limited company, and Sharia compliant lenders take this at the same 80% funding to value as a personal application.
Limited company requirements
- The company must be registered in England or Wales.
- It must be a special purpose vehicle set up for property rental, with SIC code 68100, 68209 or 68320.
- Up to four directors or members, all named on the application.
- Shareholders holding at least 75% of the company must be applicants.
- Rental cover of 125% at the stress rate, with top slicing allowed.
If you are deciding between personal and company ownership, our personal vs limited company buy to let calculator compares the tax both ways for all four UK nations.
HMOs and multi-unit blocks
HMOs and multi-unit freehold blocks are taken at up to 75% funding to value over a maximum 25-year term. HMOs can have up to 12 bedrooms, and student lets are acceptable on HMO applications. First-time landlords can apply for both.
The rental cover test is 145% at the stress rate and the minimum value is £100,000. Multi-unit blocks with more than 12 units need a value of at least £100,000 or £50,000 per unit, whichever is greater. Where a licence is needed, your conveyancer must confirm before completion that the licence application has been made. Our multi-unit buy to let mortgage page covers conventional options for larger blocks.
Expat landlords
UK citizens living and working abroad can apply in their own name or as a director of a company. Expats are accepted from 13 named countries plus the European Economic Area: Australia, Bahrain, Brunei, Canada, Hong Kong, Kuwait, Malaysia, New Zealand, Oman, Qatar, Saudi Arabia, Singapore, the United Arab Emirates.
You need a UK bank account in your name for the monthly payments. US citizens, including dual nationals, cannot apply wherever they live, and lenders make no exceptions to this.
Bridge to let and below market value purchases
If you are buying at auction, buying below market value or need to refurbish before a property can be let, a bridge to let combines a short Sharia compliant bridge with a buy to let exit fixed at the start.
How the bridge to let works
- A 6-month bridge on properties worth £80,000 to £1 million, at 1% a month.
- One £495 application fee covers both stages, and one valuation is used for both.
- There is no separate buy to let application fee, and the buy to let product fee drops from 1% to 0.5%.
- The buy to let exit goes up to 80% funding to value, subject to the rental cover test, and can release equity on day one where the valuation supports it.
Where a property is priced 20% to 25% under market value, the bridge can fund up to 90% of the price or 75% of the market value, whichever is lower. The buy to let exit can then be based on the full market value from day one. For short-term purchase funding on its own, see our Islamic bridging finance page, and for ground-up schemes see Islamic development finance.
Islamic and conventional buy to let compared
| Feature | Islamic buy to let | Conventional buy to let |
|---|---|---|
| Legal structure | You and the lender co-own the property under a lease agreement | You own the property and the lender holds a mortgage |
| Monthly payment | Rent on the lender’s share, plus acquisition payments if chosen | Interest, plus capital on a repayment mortgage |
| Maximum funding | Up to 80%, or 75% on HMOs and multi-unit blocks | Varies by lender |
| Further advances and second charges | Not available with our main lender | Commonly available |
| Porting to a new property | Not available | Available with some lenders |
| Tax on the finance cost | Treated as interest, so Section 24 applies to individuals | Section 24 applies to individuals |
| Stamp duty | Relief stops a second charge, so you pay the same as a conventional buyer | Standard rates |
| Who can apply | Landlords of any faith | Landlords of any faith |
If you are open to both routes, our buy to let mortgages page covers the wider market, including limited company, portfolio and HMO lending from conventional lenders.
Points to check before you apply
What these products will not do
- No further advances or second charges. To raise more money later, you refinance the whole property.
- No porting. If you sell, the plan ends and you apply again on the next property.
- No part and part. The plan is either rent and acquisition, or rent only.
- Freehold flats are not accepted unless they are part of a multi-unit block, and flying freeholds must be no more than 15% of the total area.
- Leasehold properties need at least 45 years left on the lease after the term ends.
- Properties worth over £5 million are not accepted as security.
- Offers last 90 days, and the lender uses its own panel of conveyancers acting for both sides.
Tax and stamp duty
Islamic buy to let is taxed in the same way as conventional borrowing. The rent you pay the lender on its share counts as an alternative finance return, and HMRC treats that return as interest.
For individual landlords, that means the finance cost restriction known as Section 24 applies. The GOV.UK guidance on the change lists alternative finance returns among the costs it catches, so you get a basic rate tax reduction rather than a deduction, exactly as you would with a mortgage. For limited companies, the return is treated as interest under the loan relationship rules and deducted in the normal way, as set out in the HMRC Corporate Finance Manual at CFM44040.
Co-ownership could in theory trigger stamp duty twice, once when the lender buys its share and again as that share passes to you. Sections 71A to 73 of the Finance Act 2003 give relief so that does not happen, as explained in the HMRC Stamp Duty Land Tax Manual at SDLTM28005. In Wales, Schedule 10 of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 does the same for land transaction tax. You still pay the same amount as a conventional buyer, including any higher rates for additional properties.
Who we can help
Business purpose only
We arrange Islamic buy to let for landlords letting property as an investment: limited companies, LLPs, portfolio landlords and individuals letting to unrelated tenants.
We are not authorised by the Financial Conduct Authority, so we cannot arrange a home purchase plan for a property you or a family member will live in, or a buy to let where a relative will be the tenant. For your own home, speak to an FCA authorised broker who arranges Islamic home purchase plans.
How the process works
- Initial call. Tell us about the property, the rent, your deposit and whether you are buying personally or through a company.
- Decision in principle. We check the case against the lender’s criteria and rental cover test and obtain a decision in principle.
- Application and valuation. Income is usually checked electronically, and the valuation is normally valid for six months.
- Offer. The offer is valid for 90 days.
- Legal work. The lender’s panel conveyancer acts for both sides and completes the co-ownership and lease documents.
- Completion. You pay your deposit, the lender pays its share and the tenancy can begin.
Frequently asked questions
Is buy to let halal?
Letting property to tenants is widely accepted as a permissible business in Islam. The main concern for most Muslim landlords is the finance, because a conventional buy to let mortgage charges interest. An Islamic buy to let mortgage replaces that loan with co-ownership and rent. Scholars hold different views on some details, so check the lender’s Sharia certification if you follow a particular board.
How much deposit do I need for an Islamic buy to let mortgage?
You need a deposit of at least 20% of the purchase price, because lenders fund up to 80% of value. HMOs and multi-unit blocks need at least 25%. On a purchase the deposit can come from your own savings or as a gift from a family member. The rental cover test can limit the amount further, so you may need more.
Can I get an Islamic buy to let mortgage through a limited company?
Yes. Limited companies and LLPs registered in England or Wales can apply at up to 80% funding to value. The company must be a property rental SPV with SIC code 68100, 68209 or 68320, and can have up to four directors, all named on the application. The rental cover test for companies is 125% at the stress rate.
Can expats get a halal buy to let mortgage in the UK?
Yes. UK citizens living and working in Australia, Bahrain, Brunei, Canada, Hong Kong, Kuwait, Malaysia, New Zealand, Oman, Qatar, Saudi Arabia, Singapore, the United Arab Emirates or the European Economic Area can apply personally or through a company. You need a UK bank account in your name for the monthly payments. US citizens, including dual nationals, are not accepted.
Is an Islamic buy to let mortgage taxed differently from a normal mortgage?
No. HMRC treats the rent you pay the lender as an alternative finance return, which is taxed as interest. Individual landlords get the same Section 24 basic rate tax reduction, and companies deduct it under the loan relationship rules. Stamp duty relief under the Finance Act 2003 stops co-ownership creating a second charge, so you pay the same as a conventional buyer.
Can I remortgage my buy to let onto an Islamic product?
Yes. You can refinance an existing buy to let onto a Sharia compliant product, including straight off a bridge that has been in place for less than six months, and raise capital up to the normal funding limits. If you bought less than three months ago, the lender uses the lower of the purchase price plus improvement costs, or the current valuation.
Tell us about the property
Send us the address, the rent and how you want to own it, and we will come back to you, usually within 24 hours, with the realistic Sharia compliant options and what they are likely to cost.
About the author
Marcus Wright is the owner and founder of Bolton Business Finance Ltd. He has worked in financial services since 2008, beginning his career at Santander, and has been a commercial finance broker since March 2019.
He founded Bolton Business Finance in 2020 to give businesses access to the whole lending market rather than one bank’s own product range. The firm is a member of the National Association of Commercial Finance Brokers and works with a panel of 135+ lenders.
Marcus arranges commercial mortgages, bridging, development finance, business loans, asset finance, invoice finance and merchant cash advances. Call 0161 546 9128.
Bolton Business Finance Ltd is an independent commercial finance brokerage, not a lender. We are not authorised by the Financial Conduct Authority and can only complete non-regulated introductions. All lending is for business purposes only. Registered address: Westgate House, 1 Westgate Avenue, Bolton, Greater Manchester, BL1 4RF. Company number 12495909.