OK, maybe ex-Liberal big boss John Hewson is famous for not being able to explain complicated concepts, like, whether you need to pay GST on a cake. But this hasn’t held him back from becoming chair of specialist lender Crescent Finance.
Crescent Finance is linked to Crescent Wealth, the board of which Hewson joined in late 2018, and the idea behind the new concept is to provide halal, or Islamically compliant sharia finance, to Muslim Australians. If successful, the project will see $5 billion in home loans made available in Australia, funded by both local investors and overseas neighbours such as Brunei, Indonesia and Malaysia.
In Australia, according to a University of SA study, Muslim (per capita) fully owned home ownership runs at around 50% of the national average, and both Hewson and his employers see that as a fantastic opportunity for a specialist home loan provider.
How does Sharia finance work?
Under Sharia law, the payment of interest is forbidden. This obviously turns a traditional mortgage on its head and needs some creative thought.
There are several options that allow potential homeowners to buy under the religious rules, including having a ‘lender’ buy a house and resell it (for a higher price) in instalments to a buyer or entering a ‘lease to purchase’ agreement.
Hewson’s firm is planning to woo investors with the offer of regular rental payments linked to real estate, with a targeted return of 3%-4.45%.
So how many customers are there for the new ‘lender’?
According to the 2016 Australian Census, the number of people who self-identify as Muslim is around 2.6%, or just over 600,000 people.