A Home Purchase Plan looks like a mortgage from the outside: monthly payments, a deposit, a term of up to 40 years, a valuation and a solicitor. Underneath, the legal machinery is entirely different, and understanding it is not academic. It determines who owns your home, what happens if you fall behind, and whether the product satisfies your own scholar's standard. This guide explains the structure used by Gatehouse Bank, StrideUp and Offa, based on their published documents, verified August 6, 2026.
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The three contracts inside an HPP
An HPP combines separate agreements. First, a co-ownership agreement (diminishing musharakah): you and the provider buy the property together. Your deposit is your initial equity share; the provider funds the rest. Second, a lease (ijara): the provider rents its share to you, so you can live in the whole property while owning only part of it. Third, an acquisition arrangement: each month you buy a slice of the provider's share, so its stake diminishes and yours grows until you own everything.
The separation matters religiously. Classical scholarship prohibits combining two contracts so that one is conditional on the other. Offa addresses this head-on in its published FAQs: its partnership agreement and lease are independent contracts, each valid on its own. StrideUp publishes similar reasoning. If a provider cannot explain how its contracts are separated, that is a question worth asking before you sign.
Who actually owns the house
This surprises people. Under Gatehouse's acquisition-and-rent model, the bank is the registered legal owner at the Land Registry, while you and the bank both hold beneficial ownership. Your beneficial share grows with every acquisition payment. Offa is similarly explicit in its buy-to-let disclosures that it remains legal owner until you have bought it out in full. You are not a tenant in the ordinary sense, but you are not the outright legal owner either, until the final payment.
Practically, you occupy, decorate, insure and maintain the home like any owner, and you keep all of the capital growth on your equity share. But default remedies flow from the lease and the co-ownership agreement rather than from mortgage law alone, so read the provider's risk documents, not just the brochure.
How the monthly payment splits
Each payment has two components. The rent portion compensates the provider for your use of its share; the acquisition portion buys more of that share. Early in the term, rent dominates because the provider's share is large. Over time the balance tips toward acquisition, exactly as interest and principal do in a repayment mortgage. That resemblance is deliberate: the payment profile is familiar, while the underlying rights are different.
Rent is reviewed on a published schedule. Gatehouse offers 2-year and 5-year fixed rental rates (from 5.63% for UK residents at our August 6, 2026 crawl), after which the rate reverts to its standard variable rate, 7.25% at the same date. Offa's rate card ran from 5.50% to 6.90% depending on finance-to-value and fix length. StrideUp advertised rates from 5.99%. These are rental rates benchmarked to market indicators for comparability, which brings us to the most common objection.
Why the rate looks like an interest rate
HPP providers quote percentage rates that track the same benchmarks conventional lenders use. Critics say that makes the products interest in disguise. The providers' published answer: benchmarking is a pricing reference, not a change in the contract's substance. Rent on a co-owned asset is permissible; measuring that rent against a widely understood number does not convert it into a loan. StrideUp defends this at length on its site, and Offa prints its version in its FAQs. Scholars certifying these products (Amanah Advisors under Mufti Faraz Adam for StrideUp and Offa, Gatehouse's board under Sheikh Nizam Yaquby) accept the argument. Some scholars do not, and prefer Pfida's model, where rent is set by the local rental market instead. Know which camp you sit in before choosing.
Buying the provider out faster, or slower
Every HPP lets you accelerate. Gatehouse allows additional acquisition payments up to 10% of the outstanding share each year without charge; beyond that, an early redemption charge of 1 to 3% applies during fixed periods. StrideUp applies early payment charges above its annual overpayment allowance. You can also buy the provider out entirely at any time, when refinancing or selling. On sale, you keep your equity share of the proceeds and the provider takes its share.
What happens if you cannot pay
Arrears on an HPP are handled under FCA rules for regulated products, with forbearance obligations similar to mortgages. But the endgame differs: because the provider owns a share (or is legal owner), remedies involve terminating the lease and selling the property, with proceeds split by ownership shares. StrideUp's tariff lists arrears administration at GBP 50 per month and field agent visits up to GBP 120, published in its Tariff List dated July 1, 2026. The regulated HPPs from Gatehouse, StrideUp and Offa carry Financial Ombudsman access; unregulated products such as buy-to-let purchase plans do not, a distinction we cover in our regulation and FSCS guide.
HPP versus the alternatives
| Feature | HPP (co-ownership) | Commodity murabaha | Pfida partnership |
|---|---|---|---|
| Underlying basis | Shared ownership of the home | Commodity trade with fixed markup | Partnership with no debt |
| Payment obligation | Rent plus staged buyout | Fixed deferred sale price | Rent only; equity purchase optional |
| Scholar consensus | Strongest mainstream support | Accepted, contested by purists | Strictest risk-sharing |
| UK examples | Gatehouse, StrideUp, Offa | Al Rayan Premier, Nomo, Nester | Pfida OwnTogether |
The table simplifies, but the pattern holds: co-ownership HPPs are the mainstream, commodity murabaha is the pragmatic fixed-obligation route, and Pfida is the purist outlier. Our diminishing musharakah versus ijara guide goes deeper on the contract mechanics.
Five things to check before signing any HPP
- Who is the registered legal owner during the term, and what does the risk document say about default?
- What is the rent review mechanism after the fixed period, and what is the reversion rate today?
- What is the annual overpayment allowance, and what do early payment charges cost above it?
- Is the product FCA regulated, and is the firm covered by the Financial Ombudsman and FSCS?
- Is the Shariah certificate published, current, and signed by named scholars you recognise?
Worked example: GBP 250,000 home, 10% deposit
Say you buy a GBP 250,000 house with GBP 25,000 down. The provider funds GBP 225,000, so the co-ownership opens at 10% you, 90% provider. At a 5.99% rental rate (StrideUp's advertised from-rate at our crawl), the first year's rent on the provider's share is roughly GBP 13,500, on top of which your acquisition payments buy down its stake. Over a 30-year term the provider calculates a level monthly payment that clears its entire share by the end, exactly as an amortising mortgage would. If the house doubles in value, your equity share of that growth is yours; you buy the provider's remaining ownership units at the contractually agreed basis, not at a renegotiated market price mid-term. If you sell early, the sale proceeds split by beneficial ownership at that date, after the provider's share is settled.
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Note what the example does not include: the GBP 1,249 product fee, legal fees, valuation, buildings insurance (required, since the asset secures the arrangement) and stamp duty. First-year cash costs run meaningfully beyond the monthly payment, which is why our deposits and affordability guide budgets four buckets, not one.
All rates and fees cited were verified against provider publications on August 6, 2026. Compare live products side by side on HalalWallet's home financing page.