HSBC plans to be the first high street bank to offer mortgages that comply with Shariah - Islamic law, under which the receipt and payment of interest is forbidden.

Lenders in the UK have been discouraged from providing Sharia compliant mortgages for the country's 1.8 million Muslims. However, following regulatory alterations announced by Gordon Brown in the Budget, things could be about to change.

Until now, high street banks in the UK have avoided what are called Sharia compliant mortgages for the UK's Muslim population because they are more expensive than conventional products.

HSBC's scheme aims to make it easier for Muslims living in the UK by buying the property outright on the customer's behalf and then leasing it back to them for an agreed term, thus avoiding any interest payments.

The buyer will then pay a monthly rent as well as a contribution towards the price of the property and become the official owner of the house after the final payment.

This transferral of ownership from the owner to the financier and from the financier to the new owner means that the property changes hands twice instead of once and that stamp duty therefore has to be paid an additional time.

The Chancellor’s changes mean that the requirement to pay stamp duty twice will be removed, making Sharia compliant mortgages more competitive. It is likely that more high street banks will now be taking an interest in supplying Muslim mortgages.