Understanding kosher lending - Heter Iska.

Jewish Law has long shaped how money is lent and invested within the community. For many, the concept of Heter Iska can sound complex or daunting, yet it underpins a thriving market estimated to be worth between £6 billion and £7 billion in the UK alone.

In this blog, Marc Goldberg, CEO Group Sales & Distribution at Together, speaks with Rabbi Maxim Cohen of the Jewish Lending Institute to explain Heter Iska and explore the proud history of Jewish lending in the UK.

Marc: For those unfamiliar with Jewish Law, why is interest between Jews traditionally prohibited?

Maxim: The Torah prohibits lending money with interest to a fellow Jew. The principle is rooted in social responsibility - if someone needs help, you support them rather than profit from their difficulty.

When lending becomes purely commercial, that altruistic element can be lost, which is why charging interest (ribis) between Jews is forbidden under Jewish Law.

Marc: How does a Heter Iska work in practice?

Maxim: Under a Heter Iska, the lending relationship established in the underlying loan documents is recast as a partnership structure. Typically, part of the funds is treated as an interest-free loan and part as an investment by the lender in the borrower’s real estate business. The borrower acts as the Managing Partner and the lender as the Investing Partner.

The payments due under the loan are re-characterised as the lender’s share of profits from that investment. In halachic terms, the lender is therefore considered to be participating in investment risk rather than charging interest on a loan.

Importantly, the Heter Iska contains detailed evidentiary safeguards. A borrower cannot simply assert a loss. Strict requirements apply, including immediate notification, compliance with defined evidentiary standards and, where necessary, a hearing before a Beth Din (Rabbinical Court). At the same time, the lender’s civil enforcement rights under English law remain fully intact.

Marc: Is Heter Iska just a religious concept, or is it also a legal one?

Maxim: It is both. A Heter Iska is a formal legal addendum to the underlying loan documents. It aligns Jewish Law with English commercial law so that the transaction is valid and enforceable in civil law while also compliant with Halacha.

If required, it must be executed at the same time as the loan documentation and signed by all relevant parties, including guarantors where applicable. It cannot be applied retrospectively once a transaction has completed.

Whether a Heter Iska is required can depend on the structure of the counterparties, including corporate shareholding and funding arrangements, so each transaction needs to be assessed individually.

Together has worked closely with leading Rabbis to develop its Heter Iska proposition, ensuring it is robust, compliant and practical for modern lending.

Marc: How did your own background lead you into the Jewish lending industry?

Maxim: I grew up in Hale, Greater Manchester, and became more religious over time. Today, I operate at the intersection of structured finance and Rabbinical law. My role is to ensure that transactions are commercially robust while fully compliant with Jewish Law.

I work with leading Batei Din (Rabbinical Courts) in the UK, USA and Israel to ensure that Heter Iska structures are implemented correctly where required – educating clients, brokers and lenders throughout the process.

I have also worked closely with Rabbi Eli Brief of UOHC and Ben May of Patron Law, collaborating with lenders, brokers and clients to ensure that transactions are structured in accordance with Jewish Law. Together, they have formulated a robust Heter Iska document that protects both client and lender, maintaining full commercial strength while ensuring compliance with Rabbinical standards within the Community.

Marc: What types of clients do you typically work with?

Maxim: I advise a wide range of clients, from smaller-scale investors to those with property portfolios worth up to £85 million. Many families have built property businesses over generations. Others are experienced landlords who acquire distressed residential or commercial assets and add value through redevelopment.

Even those who are not particularly religious in their property dealings often want to ensure that their financial arrangements align with their values. Heter Iska enables them to do that without compromising commercial reality.

Marc: From a lender’s perspective, what’s the appeal?

Maxim: Heter Iska can attract a high-calibre client base, who are experienced, asset-backed and values-driven. Lenders who understand this space can access a loyal and sophisticated market while maintaining full commercial protections under English law.

Marc: Can you give a real-world example of finance including Heter Iska?

Maxim: Together is well known for speed, strong relationships and an in-house legal team. I recently brokered a £7.7 million short-term bridging loan with Together, secured against 45 properties, completed in just four days using a Heter Iska structure.

It was a strong example of how faith-based principles and modern finance can work seamlessly together.

Marc: Clients who request a Heter Iska expect their case to move with the same speed and simplicity as any other application. Our team at Together has a clear, proven process to make that happen.

If you’d like guidance for a current client or want to learn more about how our Heter Iska structure works in practice, visit our Heter Iska page or get in touch with our specialist team.