Sharia Compliance may not be the first thought that springs to mind when you think about investing. But, with its rigid laws on what counts as exploitative or unfair lending practices, it is arguably the number one priority for Muslim investors looking for ways to generate passive income while observing the ethical rules of Islamic finance.

As a junior broker at Concept Capital Group, I have had the pleasure of working with international investors from a diverse range of backgrounds. For that reason, I can say that Sharia Compliance offers an opportunity for investors, firms and asset managers to tap into a fast-growing international market of faith-based investors. All it takes is a bit of understanding of how and why.

Understanding Faith-Based Investing

To understand the tenets of Sharia Compliance and Islamic finance as a whole, it is important to first understand faith-based investing.

As an investment philosophy, faith-based investing seeks to balance the standard goal of maximizing investor returns with asset managers, investment companies, assets and opportunities that align with a person’s religious or spiritual values. In this way, faith-based investing is similar to ethical investing with a focus on the resulting net good and feelings of personal fulfilment.

Like ethical investing, faith-based investing requires investors to follow a set of rules regarding which assets and opportunities they may engage with. In the case of Sharia Compliance, these rules encompass the greater religious and secular practices of Muslims.

For more on ethical investing, feel free to read one of our past articles.

Understanding Sharia Compliance and Islamic Finance

Based on the sacred texts of the Qur’an and Sunnah, the literal translation of the word ‘Sharia’ is ‘the clear, well-trodden path to water’. The more business-oriented distillation of Sharia Law used in Sharia Compliance focuses on Islamic finance, or the management of money in a way that is consistent with the moral principles of Islam.

Islamic finance has been around for over a thousand years but was formalised into more legally binding financial guidelines in the 1960s when surging oil wealth in the Middle East brought renewed interest in, and demand for, Sharia Compliance.

According to the Bank of England, Islamic finance revolves around the notion that money should never have any value in itself. Because of this, Muslims investors cannot generate profits from money alone. When investing in a way that is compliant with Sharia Law, Muslims must seek out the following key principles:

Prohibition of Riba

In Arabic, Riba means ‘to increase’ or ‘to exceed’ and refers to any interest gained or paid on transactions or savings. Sharia Compliance requires Muslim investors and lenders to avoid any financial dealings that involve paying or receiving interest. This is due to the perceived inequality that interest is creates and can include traditional, non-Islamic banking or insurance.

An exception to Islam’s anti-loaning policies is Husna, also known as a ‘godly loan’. A Husna involves borrowing and returning the same amount of money without either party generating wealth through interest on the loan.

Avoidance of Haram

In Islam, the Arabic terms ‘halal’ and ‘haram’ refer to behaviour that is lawful and unlawful respectively. In the context of investing, Sharia Compliance requires Muslims to avoid any industries that cause harm or profit from activities forbidden by Islamic teachings. Haram activities include:

  • Alcohol and tobacco usage
  • The consumption or handling of pork (or other non-halal food)
  • Adult entertainment
  • Gambling
  • Weapons usage and manufacturing

Social Responsibility 

One way Sharia-compliant investing overlaps with impact and ethical investing is in its emphasis on social impact. All repayable finance such as interest, loans and mortgages are expected to instead be allocated to socially responsible causes to attract Islamic investors.

The nature of socially impactful investments often encompasses the Islamic principle of Mudarabah, otherwise known as a profit-sharing contract. In these contracts, one party brings capital while the other exerts effort on their behalf in exchange. Any profits from this type of arrangement are then shared between both parties.


Sharia Compliance mirrors ethical investing once again in its implicit need for complete clarity and openness at every level of an investment process. Islamic investors expect transparency throughout an investment opportunity to ensure total adherence to Sharia Laws.

Although Sharia Compliance is open to individual interpretation, these principles are the baseline for the average Islamic investor.

The Value of Sharia Compliance

Despite Muslims making up almost 25% of the world population less than 1% of global financial assets qualify for Sharia Compliance. In the UK alone, a 2019 census by the Office for National Statistics showed that Muslims make up roughly 5.7% of the population. And, with a global market size that grew by over 300% to reach $200 billion in assets in the last decade, Islamic finance is something modern investors cannot afford to be clueless about.

The opportunity for international investment companies and asset managers to profit from the understanding and implementation of Sharia-compliant investment offers is stronger than ever. Some banks and financial services providers even work with Sharia Boards to help design and oversee Sharia Compliant products. The Bank of England, for example, established a Sharia-compliant facility in 2017 to allow Islamic banks in the UK to hold central assets.

An article from the Financial Times further showed that Sharia Compliant investments outperformed global equities in the five years leading to 2022, cementing the viability of this investment type for financial services providers.

Sharia Compliance with Concept Capital Group

For non-Islamic companies, attracting Islamic investors and partners has translated to meeting the following financial ratios according to the London Stock Exchange Group:

  • Debt must be less than 33.333% of total assets
  • Cash and interest-bearing items must be less than 33.333% of total assets
  • Accounts receivable and cash must be less than 50% of total assets
  • Total interest and non-compliant activities income should not exceed 5% of total revenue.

At Concept Capital Group, we offer an opportunity in modular property investment that coincides with the laws of Sharia Compliance. In doing so, we invite international and ethical investors to enjoy the benefits of a highly specialised alternative to buy-to-let designed to maximise social impact.

If you would like to explore the ethical and international nature of our modular homes, book a call with our team today.

Concept Capital Group

Latest Posts

Our Products

Buy-To-Let Modular Homes

Our modular homes blend modern design principles with the adaptability of modular construction to maximise comfort, sustainability and build efficiency at an accessible price. Built to the British Standard Institution’s BS3632 specifications for year-round residential living, our homes are liveable for a minimum of 25 years and designed to meet the latest minimum EPC ratings for energy efficiency.


Up to 12 Years

ROI: 10%

Fully Managed

Fully Insured

1st Payment in 90 Days

Request a call back

Fill in the form below to request a call back from one of our team.

Download our brochure