Question Summary:
I appreciate if you can help the Mulsim umaah and give your opinion on these models of financing and investment. Question Detail:
I understand that bank interest (ribb’a), house-finance (mortgage) and all dealing with interest (either collecting/earning or making payments) are clearly stated prohibited in Islam. In North America, ISNA, ISNA Canada (Islamic Society of North America) have been offering House Finance and investment for decades. However, due to limited resources and very high ratio for down payment (home buyer’s equity), tens of thousands of Muslims either cannot afford buying a house or would look for alternatives (either allowed, and sorry to see that others using prohibited options – fix term or variable rate mortgages).
ISNA and Lariba have ruling (shari’ah compliance) certified by Moulana Taqi Usmani. Even though, I have heard about ISNA house-finance there is aspect of zul’m (suppression) due to their strict terms, and giving no negotiating power to home-buyers and investors. On the other hand, in the recent past there are many other businesses are growing offering investments and house-finance with very competitive terms and affordable rates. These companies may or may not have an authentic scholar certification or opinion declaring their models are truly in accordance to the shari’ah.
My intention for writing this email is to get a clarity that these companies are not causing another fitn’a in the name of religion (and I hope and expect, that is not the case, but that is only my personal opinion without complete knowledge).
I personally heard about these companies and they have similar financing models:
http://mycapitalinvestments.com/ProductsRentToOwnFinancing.htm
http://www.umfinancial.com/
http://www.salamfinancial.com
http://www.lariba.com/
http://www.hsbcamanah.co.uk/amanahuk/home-finance/index.html
I understand that you may need to contact them directly or spend some time review their websites and this could take long time, but I appreciate if you can help the Mulsim umaah and give your opinion on these models of financing and investment.
Jaza ka Allah khair and looking forward hearing from you.
Answer :
In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatoh
1) The contract must be Shariah Compliant. This is the fundamental requirement in Shariah Compliance and probably the most difficult. It requires the expertise of competent Ulama as well as experts in business and economics. The underlying spirit of the contract must be total Shariah Compliancy.
2) The implementation of the contract is equally important. If one has a Shariah Compliant Contract but that is not correctly implemented, then the contract does not mean anything. Any deviation from the contract will impact negatively on the Shariah Compliancy of the deal.
3) The names of renouned Ulama being on the Shariah Board of different schemes is not sufficient.
4) The expert Ulama should be involved from the beginning till the end. They should be involved in drawing up the scheme and being confident of the scheme being 100% correct. They should also supervise the Shariah implementation of the scheme.
5) The Ulama on board should be independent and free to raise any Shariah related objections against the Scheme. It will be ideal that the Ulama’s contribution be gratis or if there is a need to remunerate the Ulama, then that be arranged via the independent body and not the Bank as that will ensure the independence of the Ulama. In such an instance they will not be forced to compromise due to unforeseen circumstances.
And Allah knows best
Wassalam
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In'aamiyyah
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