A beginner’s guide to Shariah Finance

I first came across Shariah Finance a few months ago through the @MuslimMoneyTalk podcast and it’s been an eye-opening experience. Senior professionals in the Islamic finance sector have been incredibly generous with their time, helping me understand this ethical and asset-focused way of doing business.

At Goldfinch Property Investments, we continue to offer fixed-rate returns with competitive interest rates — and will continue to do so — but this has been a chance to explore something different, importantly to be more inclusive AND we believe this approach could appeal not only to Muslim investors, but to non-Muslims too. To date, we're pretty impressed.

I’ve shared the odd post here and there, but now feels like the right time to write a blog. Shariah-compliant finance is not widely understood outside the Muslim community — and it isn’t exclusively for Muslims.

So, what sets Shariah Finance apart?

No interest (RIBA): Shariah law prohibits earning money through interest. Instead, wealth is created through tangible assets — for example, generating and sharing an income from a property, rather than profiting from lending.

High ethical standards: Shariah-compliant finance is built on strong moral principles that are entirely congruent with what society at large in the UK would see as ethical. But unlike conventional ethical marketing claims, these standards are regularly audited. It’s not just lip service. The only difference in terms of what is seen as ‘moral’ is that premises that sell products and services must be ‘Halal’ e.g. no pubs or casinos.

Beyond ESG: Unlike ESG-labelled products offered by mainstream banks, a Shariah-compliant institution must be ethical across its entire operations — not just at the product level. That’s a significant difference.

Shared risk and reward: In a traditional development finance model, if a property project underperforms (say, due to a lower-than-expected end valuation), the borrower bears the brunt while the lender still demands repayment on the interest charged. Shariah Law perceives this as unfair: both parties in the joint venture share the risk and the reward, provided there’s mutual effort and transparency.