Fatwa ID: 06403

Answered by: Alimah Zakiratul Hoque

Question:

Has anyone looked into Ijara CDC or have any info on who endorses them or if there are any issues in their shari’ah compliance?

In the name of Allah, the Most Gracious, the Most Merciful

Answer:

Ijarah CDC is an Islamic finance company based in which aims to provide shariah-compliant financing options for homebuyers. The company works by purchasing the property (through a Trust) for the customer and then lending it to them on an Ijarah contract. The customer rents the property and then buys it at a later date. They offer a number of different purchasing agreements including Musharaka and Murabaha.

Ijarah is permissible when done in compliance with its conditions, according to the Ulamaa (Badai Al Sanai, Vol 6, Pg 35).

In Ijarah, no condition should not be made that is not necessitated by the agreement. For example, the lessor should not be liable for losses if he did not cause them (Fatawa Hindiya, Vol 4, Pg 500). Ijarah CDC puts all the loss on the lessor, which goes against the Shariah.

I could not find explicit information regarding how the company finances the purchase of the houses. From what I could see, the bank finances the house which is bought in the Trust’s name, and the Trust pays the bank. The bank is paid with the rent paid by the lessor/customer through the Trust. If the company/trust pays interest to the bank, the financing model would not be Shariah compliant.

In summary, there are elements of Ijarah CDC that may not be Shariah-compliant, depending on the contract.

Further information regarding this topic can be found online.

فالإجارة عقد لازم إذا وقعت صحيحة عرية عن خيار الشرط و العيب و الرؤية عند عامة العلماء

الإجارة تفسدها الشروط التي لا يقتضيها العقد كما إذا علي الأجير الخاص ضمان ما تلف بفعله أو بغير فعله أو علي الأجير المشترك ضمان ما تلف بغير فعله علي قول أبي حنيفة رحمه الله

Only Allah knows best.

Written by Alimah Zakiratul Hoque

Checked and approved by Mufti Mohammed Tosir Miah

Darul Ifta Birmingham