Housing Financing in Islamic Law
A Study of some products for Housing Financing and applicable to Islamic Law
Dr. Salah Fahd Al-ShalhoobAssistant Professor
Department of Islamic and Arabic Studies King Fahd University of Petroleum and Minerals
& writer in Aleqtisadia Newspaper E-mail: [email protected]
Introduction
The aim of study Importance of the study The concept of housing finance
The aim of study
To overview the forms of housing finance which are offered the financial institutions as forms which applicable to the principles of Islamic law
Importance of the study
The Muslims needs of a place to live Many people today can not afford buying
houses by cash Find out a way to finance Muslims without
being involved in a conventional mortgage
The concept of housing finance Housing finance is considered as contracts
provided by the financial institutions for the purpose of personal finance to buy properties. There are many contracts have been discussed under the concepts of Islamic finance, such as mark up (al-murabaha), partnership (al-musharaka), al-istisna and leasing (al-ijara). And we can derive from the contracts some products to finance people to get properties under the concept of Islamic law.
Forms of housing finance
Deferred Sales (bay’ al-mu’ajal) Mark-up (al-murabaha) Diminution partnership (al-musharaka al-
mutanaqisa) Commission to manufacturing (al-istisna’) Leasing ending with ownership (al-ijar al-
muntahi bi al-tamlik)
Deferred Sales (bay’ al-mu’ajal)
Sales divisions in terms of time of payment Ordinary Forward Deferred
Ruling of deferred sales Scholars views in increasing the price due
to deferment
Sales divisions in terms of time of payment
Ordinary sales
Forward sales
Deferred sales
Ordinary sales
Subject matter Price
Payment now
Delivery now
Forward sales
Subject matter Price
Payment now
Delivery later
Deferred sales
Subject matter Price
Payment later
Delivery now
Ruling of deferred sales
The general permission of sales
The prophet practiced it
Scholars views in increasing the price due to deferment
The majority say it is permissible
The minority say it is prohibited
Mark-up (al-murabaha)
Definition of mark-up
Simple form of mark-up
Mark-up the orderer of the purchase
Diminution partnership (al-musharaka al-mutanaqisa)
Bank + Client
Bank %90 Client %10
Bank %0 Client %100
Commission to manufacturing (al-istisna’)
The concept of commission to manufacturing (al-istisna’)
al-istisna‘ wa al-istisna‘ al-muwazi
The concept of commission to manufacturing (al-istisna’)
client
Pay by delivery
Deliver latermanufacturer
al-istisna‘ wa al-istisna‘ al-muwazi
Bank
pays by delivery
Del. when finishcontractor Client
Del. When rec.
Deferred payment
Leasing ending with ownership (al-ijar al-muntahi bi al-tamlik)
Concept of Leasing ending with ownership (al-ijar al-muntahi bi al-tamlik)
Categories of Leasing ending with ownership (al-ijar al-muntahi bi al-tamlik)
Ruling leasing ending with ownership (al-ijar al-muntahi bi al-tamlik)
Categories of Leasing ending with ownership
leasing ending with ownership by way of gift (hiba) leasing ending with ownership through transfer of title
at the end of the lease for a token consideration or at a nominal price
leasing ending with the ownership through sale prior the end of the lease term for a price that is equivalent to the remaining leasing (al-ijara) instalment
Ruling leasing ending with ownership
The contract under the concept of two transactions combined in one.
The difference between al-muntahi bi al-tamlik and al-wa’d bi- al-tamlik.
Scholars view in leasing ending with ownership.
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وبركاته الله ورحمة عليكم والسالمDr. Salah Al-Shalhoob