To Buy Or Not To Buy, That Is The Question: An Analysis Of Possible Home Purchasing Options For Muslims In The UK

Disclaimers:

No. 1. This is not a fatwa (an Islamic legal ruling), I do not have the authority to issue one. This article is simply a summative analysis of some of the possible options available to Muslims, particularly those living in the United Kingdom, to purchase a suitable accommodation and the Islamic positions regarding these options. If you need a fatwa for your specific circumstance, please seek out a qualified, competent, and respected scholar in your locality.    

No. 2. The fiqh (Islamic jurisprudence) scope of this article:

Fiqh is either madhab-based (according to one of the four established legal schools) or comparative, and in both approaches, precise attribution is very important. Therefore, due to my own personal limitations, the fiqh sections of this study will rely on the Ḥanbali madhhab from the works of both classical and contemporary sources. 

Where relevant, I will also refer to the following Fiqh councils and Sharia boards: The European Council for Fatwa & Research; Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI); The International Islamic Fiqh Academy (IIFA); and The Islamic Council of Europe. It should be noted that these respected organisations do not always strictly adhere to a single madhab (some may do so depending on the background of its scholars and the community that they serve) and therefore these institutions may incorporate elements from different madhabs when issuing fatwas (legal rulings) and resolutions.  

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Introduction

Muslims in the UK will have a number of reasons for wanting to purchase a home: a genuine need for a place to live for themselves and their families, or even economic reasons such as investing or retirement planning. Differing scholarly views on the methods to purchase a house have always been one of the most intensely debated topics for the last few decades. Despite the numerous fatwas, articles, books, lectures, workshops, and podcasts on the topic, Muslims are far from reaching a decisive conclusion on the matter. This has caused a huge amount of alarm and concern for many Muslims.

In this article, I want to delve into the following topics before concluding: 

1. Social and Private Renting;
2. Social Dealings and Transactions in Islam;
3. Conventional Interest-Based Mortgages; 
4. Islamic Home Purchase Plans;
5. Other alternative ways to purchase a house; 
6. Summary; and
7. The responsibility on the average Muslim 

Before that, let us have a brief look at how the Qur’an and Sunnah view the concept of a home or dwelling.

A Necessity and Place of Peace

A home is one of the basic necessities for a wholesome and balanced life. Allah says in the Qur’an: 

“And Allah has made your homes a place to rest…” [Qur’an: 16:80]

“A house in Arabic is called a ‘maskan’ because it offers inhabitants a place away from the demands and pressures of the outside world to find peace, tranquillity, and rest.” [PC: Julian Hochgesang (unsplash)]

In fact, the Arabic term ‘maskan,’ which also means house, is derived from the Arabic verb ‘sakana,’ which means to calm down, to be at ease, and to feel tranquil. Hence, the words ‘sukun’ and ‘sakinah’ mean calmness, tranquillity, peacefulness, serenity, etc.²

Therefore, a house in Arabic is called a ‘maskan’ because it offers inhabitants a place away from the demands and pressures of the outside world to find peace, tranquillity, and rest.³

The Prophet said: 

“Part of a man’s happiness includes a good neighbour, a comfortable mount and a spacious abode.”⁴

In another Hadith, he (saw) said: 

“Four things are part of happiness: a righteous wife, a spacious abode, a good neighbour, and a comfortable mount. And four things are part of misery: a bad wife, a bad neighbour, a bad mount, and a small abode.”⁵

We are also taught by the Prophet (saw) to make dua to Allah (swt) for a spacious home. The Messenger (saw) is reported to have said in dua one night: 

“Oh Allah, forgive me my sins, make my house spacious and bless me in that which You have provided for me.”⁶

Now that we have established that a home is a necessary part of the life of every human being and a cause for their worldly delight, let us explore some of the ways Muslims can secure a place to live in the UK. Some have argued that a residential home can be acquired through renting, whether in the social or private sector, and therefore, purchasing a home is not really required. 

Let us start by exploring these two options:

SECTION 1: SOCIAL AND PRIVATE RENTING

Social Housing

Gone are the days when anyone who applied for a home through their local council would eventually be given one to rent (after spending a period of time on the waiting list). Nowadays, for the vast majority of local councils, socially rented homes are reserved for those who have a particular need (e.g., those with a disability) who are unable to rent in the open market. 

This is due to the housing crisis in the UK, which is one of the biggest economic and social challenges the country faces. Soaring housing prices, leading to a shrinking social housing stock and increasing homelessness, have left millions of households without the ability to secure stable and affordable housing.⁷

Furthermore, the Localism Act 2011 has seen an end to ‘lifetime tenancies’, allowing local authorities and registered housing associations to offer fixed-term tenancies (ranging between one, two, or five years, depending on the local council) and also introduce different levels of rent (social and intermediate).⁸  Even those with ‘lifetime tenancies’ could face massive rent increases pegged to their earnings or local private rent levels, which has been debated by the Government several years ago. ⁹

Nevertheless, if you are one of those few people in the country with a council home and a lifetime tenancy, and social rent, you are in an extremely rare and privileged position, one that you should be very thankful to Allah for!

Private Renting

In the private sector, there are huge differences in rent levels across the country, making main cities very expensive for those on an average salary. This has led to a new diaspora of young people moving out of big, expensive cities like London to more affordable places in the UK. 

Moreover, if you rent from a private landlord, the landlord is entitled to take their property back at any time. They can serve you a notice for eviction and ask you and your family to vacate the property.¹⁰ Coupled with this huge risk of lack of security, private renters also often have to accept very poor living conditions due to the lack of affordable housing in their local area.¹¹

These are some of the challenges that lead some Muslims to the decision of wanting to own their own home in order to avoid the pitfalls of being trapped in private renting. 

SECTION 2: SOCIAL DEALINGS AND TRANSACTIONS IN ISLAM 

It is important at the beginning of this section to point out the following:¹²

1. Islam encourages work, development, and progress, as the Messenger of Allah said:

“The strong believer is better and more beloved to Allah than the weak one. Be keen to do what benefits you; rely on Allah and do not act as though you are powerless. When you have a problem, do not say: ‘If I had done such and such, the result would have been such and such’. Rather, you should say: ‘This was decreed by Allah, and Allah does what He wills.’ For saying ‘If’ opens the gate for Satan.”¹³

2. Allah has entrusted us with the responsibility to care for and cultivate the earth. 

3. While Islam recognises the brokenness of the heart before Allah to be a virtue, it does not condemn wealth and prosperity, nor does it condone poverty. This is clearly shown where the Messenger of Allah said to ‘Amr ibn al-Aaṣ:

“Lawful money is excellent for a righteous man.”¹⁴

In this hadith, there is a reference to the two factors that determine whether or not money is a blessing for someone: how the person acquired it (lawful, i.e., halal money) and how he or she spends it.

4. Islam cautions that one must rely on Allah , for it is He Who decides who earns money and how much they will earn. A person who seeks money through haram (forbidden) means will not truly benefit from it by becoming content and feeling blessed. The Messenger of Allah said:

“O people, fear Allah and be moderate in seeking a living, for no soul will die until it has received all its provision, even if it is slow in coming. So fear Allah and be moderate in seeking provision; take that which is permissible and leave that which is forbidden.”¹⁵

5. Finally, wealth is condemnable if it distracts the heart from seeking Allah’s Pleasure, or if it causes one to be arrogant and disrespectful.

Therefore, there is nothing inherently wrong with wanting to purchase a home, whether one is driven by a genuine need or even a wish or desire, as long as purchasing a house can be done in a halal (permissible) manner.  Before we look at the means by which Muslims purchase homes in the UK, let us explore the conditions for valid transactions that are found in our books of Fiqh (Islamic jurisprudence). 

Selling and Trading in Islam 

Selling is permissible by consensus.¹⁶

“Muslim scholars agree on the permissibility of trade in general, as Allah subḥānahu wa ta’āla (glorified and exalted be He) has widened its rulings and has not prevented transactions except if they contain harm for the creation in their religion or their wealth.” [PC: Cytonn Photography (unsplash)]

Allah says: 

“But Allah has permitted trading and forbidden Riba.” [Qur’an: 2: 275]

Therefore, many aspects of trade are halal (permissible) according to the Qur’an, Sunnah, the consensus of the scholars, and qiyas (analogical deduction).¹⁷ Muslim scholars agree on the permissibility of trade in general, as Allah has widened its rulings and has not prevented transactions except if they contain harm for the creation in their religion or their wealth.¹⁸

Pillars & Conditions required for Halal (Permissible) Transactions in Islam and their possible Hinderances or Impediments

The following is a summarised framework based on the authorised Hanbali view from ‘Sharḥ al-Muntaha al-Iraadaat’:¹⁹

• Pillars:

1. The two contracting parties 

2. The object of sale 

1. The format of offer and acceptance, whether verbal or non-verbal 

• Conditions: 

1. Legal maturity of both parties 

2. Mutual consent 

3. The object is inherently sellable 

4. It is owned by the seller 

5. It is deliverable 

      6 & 7. It is known to both parties, as is the price 

• Hindrances: 

1. Sales during a prohibited time, such as during the Friday khuṭbah

2. Sales that entail riba or lead to harm

      3. Sales that damage social cohesion, such as outbidding or soliciting another’s offer 

      4. Sales by a city dweller on behalf of a nomad 

Parties to a contract can also place conditions within a contract; these conditions within trade transactions can either be valid or invalid.²⁰

Valid Conditions:

• Valid conditions are those that do not invalidate the aims and objectives of the contract and therefore must be fulfilled. 

The Prophet said: 

“Muslims must keep to the conditions they make.”²¹

• The first type of valid conditions of trade agreements is those that support and facilitate the contract by conferring a benefit on the seller or the buyer, e.g., taking a deposit or deferring payment. 
• The second type of valid conditions of trade agreements is those that stipulate using the product in a certain way. E.g., a seller of a house can stipulate that the new owner stay for a certain period before selling again. 

Invalid Conditions:

• The first type of invalid condition is that which nullifies the whole contract, e.g., stipulating a contract within the main one. An example is when someone says, “I will sell this item to you on condition of you renting me your house.” This is because the Prophet forbade concluding a selling contract based on another conditional contract.²²
• The second type of invalid condition is a condition that is null and void itself, but it does not nullify the entire contract. For example, a seller imposing on a buyer that he must never sell the item that he had bought. This is invalid because the Prophet said: “If anyone imposes a condition which is not in the Book of Allah, then that condition is invalid even if he imposes it one hundred times.”²³ This condition is invalid, but that does not invalidate the whole contract. 

Therefore, a sale is permissible (halal) as long as the above-mentioned pillars and conditions of a valid sale are fulfilled and the transaction is free of any hindrance to validity and free from an invalid condition that nullifies the whole contract. This opens up the possibilities of options in a contract where either party (the buyer or the seller) can cancel the deal before parting²⁴ or after parting if there was a violation (cheating or deception).²⁵

Riba (usury)

The greatest hindrance in a contract is Riba (usury). Dealing in Riba is one of the gravest sins. All of the heavenly revelations have prohibited dealing in Riba, and Allah warns those who deal in it with the severest of threats.  

Allah, the Most High, says in the Qur’an: 

“Those who consume Riba will stand (on Judgement Day) like those driven to madness by Satan’s touch.” [Qur’an: 2: 275] 

And: 

“Allah has made Riba fruitless and charity fruitful. And Allah does not like any ungrateful evildoer.” [Qur’an: 2: 276]

He (swt) also says: “O believers! Fear Allah, and give up outstanding Riba if you are (true) believers.”  [Qur’an: 2: 278]

Because,

“If you do not, then be aware of a war with Allah and His Messenger! But if you repent, you may retain your principal – neither inflicting nor suffering harm.” [Qur’an: 2: 279]

In addition to these Qur’anic verses that warn against Riba, the Prophet has also stated that Riba is one of the great destructive sins.²⁶

What is Riba?

Linguistically, the word Riba in Arabic means an increase, while in Fiqh, it refers to an increase in particular things. It is divided into two categories²⁷: Riba al-Nasi’ah (Riba of Delay) and Riba al-Fadl (Riba of Excess):

A. Riba al-Nasi’ah (Riba of Delay)

This type of Riba refers to a delay of two types: 

• First Type – increasing the debt on the borrower of money (by way of an interest rate). This is the origin of Riba al-Jahiliyyah (pre-Islamic period of ignorance)²⁸. This is when a creditor lends money, then, when the time comes to pay, he offers the person in debt more time to pay in return for more money to be paid in addition to the principal debt. This results in an excessive increase in debt and the inability of the borrower to be able to pay off the debt. 
• Second Type – selling goods of the same type but in excess, with a delay in the delivery. There are many examples of this, such as selling gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, as the Prophet said: 

“Gold is to be paid for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like and equal for equal, and payment is to be paid hand to hand.”²⁹

This type of Riba also includes selling any type of these items for the same on credit.

B. Riba al-Fadl (Riba of Excess)

This type of Riba refers to selling an item for another of the same type but in excess or taking something of a superior quality for its inferior quality. The Prophet stated that this kind of transaction is prohibited in six items: gold, silver, wheat, barley, dates, and salt.³⁰

As for the modern currency that exists, such as banknotes, the same ruling of gold and silver also applies to money as they share the same property as gold and silver (value that can be measured).  

Riba can also occur when lending money against a specified interest rate. This is where a person or institution (like a bank) gives a loan to a customer with the condition that the loan be paid back (either in full or in instalments) with additional interest. The ‘interest’ here falls into both types of Riba (an-Nasi’ah and al-Fadl) and therefore, paying it is from amongst the major sins. The same applies to loaning someone money with the condition that they pay back the loan with additional ‘interest’ on top. This is the most common form of Riba in the modern financial systems, and it is the complete opposite of what Allah describes a qard’ hasana (goodly loan) should be. 

Allah says: 

“Who is that would loan Allah a goodly loan, so He may multiply for him times over.” [Qur’an: 2: 245]

This verse refers to all forms of spending for the sake of Allah which includes lending money to those in need. It likens these acts of spending to giving a loan to Allah which indicates a great reward and virtue of giving interest-free loans to people.³¹

Also, the Prophet said: 

“Whenever a Muslim gives a fellow Muslim a loan twice, it will be like giving charity once.”³²

Therefore, although lending money when someone who is in financial difficulty contains a risk, it is ultimately considered an act of kindness. Relieving the distress of any believer is greatly appreciated by Allah, who will, in turn, relieve the distress of the lender.³³

Thus, lending money is from amongst the best types of sincere actions; it is a contract of excellence and kindness. However, if there is a stipulation for compensation or benefit, and this becomes part of the agreement, then all of these types of loans that bring about benefit are usurious.³⁴

A War with Allah and His Messenger !

It is this type of Riba (Riba al-Jahiliyyah)³⁵ where the lender lends money and then (for additional time / late payment) adds more interest when the customer is unable to pay is the type of Riba threatened with a war with Allah and His Messenger (saw). Allah (swt) doesn’t mention anyone with the threat of war in His revelation except for three people:³⁶ 

a) the polytheist;

b) the usurer; and

c) the one who shows hostility to His walee’ (close servants of Allah).³⁷

Moreover, Allah does not confine the sin to the lender on interest alone; the borrower who pays the interest, the writer of the promissory note, and the witness to it are also accomplices to this major sin as the Prophet warned: 

“Allah has cursed the one who takes interest, the one who pays it, the two persons who witness the deed, and the one who writes the contract.”³⁸

Therefore, depositing money into a bank and receiving interest is also prohibited as it is a form of Riba.  

Wisdoms Behind the Prohibition of Riba

The underlying reason for the prohibition of Riba is that it involves injustice, unfairness, and encourages inequality, which Islam forbids due to its deep concern for the moral, social, and economic welfare of mankind.³⁹

Some of the wisdoms include: 

(a) protecting foodstuffs from being monopolised by people who can get larger quantities of the food used by poor people, in exchange for the better kinds that they possess;

(b) Earning money through interest means there is less incentive to work;

(c) It allows raising the value of capital in the face of labour by allowing money to beget money rather than through real investment and dependency on labour;

(d) Interest can lead to greater gaps between the economic levels in society;

(e) Interest has the power to trap the poor into vicious cycles of debt, leading to bankruptcy; 

(f) Charging interest on loans makes people less likely to do the good deed of offering interest-free loans; 

(g) People are more likely to take part in productive business ventures that involve some reasonable risk if there is no interest;⁴⁰

Thus, in a society where interest is lawful, the rich benefit from the suffering of the poor and as a result the rich continue to get even more wealthier while the poor get poorer. This creates socio-economic classes separated by huge gulfs, leading to anger, envy, hatred, and contempt of the poor towards the rich, which in turn, threatens the social order of society and encourages civil unrest.⁴¹

‘Interest’ vs Riba – are they not the same thing?

It should be noted here that although the word interest has become synonymous with Riba in our modern age, not every ‘interest’ equates to the major sin of Riba. It is important to clarify the difference between the financial term ‘interest’ and the Sharia (Islamic Law) term ‘Riba.’ They are not always the same thing, as there are some transactions that contain ‘interest,’ however, they are permitted by the Shariah as that particular type of interest does not equate to Riba. 

One example is ‘bay’ al-ajil (deferred payment sales).⁴² It is permissible even if the instalment price is higher than the upfront cost, as agreed by The International Islamic Fiqh Academy (IIFA) of the Organization of Islamic Cooperation (formerly the Organization of Islamic Conference), in Resolution # 51 (6/2), where they stated: 

“Increasing the price for deferred payment over the immediate payment is permissible. It is also permissible to state the price of the commodity for the immediate and deferred payments. However, the transaction is not valid unless the two parties of the contract agree on the form of the transaction: immediate or deferred.⁴³“

For example, if someone purchases a phone and it has two prices: an upfront purchase price of £500 or an instalment price of £550 (to be paid in twelve instalments with the additional interest of 10% – £45.83 each month). This additional £50 added to the price of the phone is due to the 10% added interest. However, because the timeline and figures have been agreed upon from the onset, the vast majority of scholars would permit such a transaction. This is provided that the item is going from the seller to the new owner without the intervention of a third-party finance company.⁴⁴

As we have illustrated, many types of transactions are permitted in Islam, but for the purpose of this article, let us focus on the following halal (permissible) transactions in Islam:  

1. Buying;⁴⁵
2. Selling;⁴⁶
3. Renting/leasing;⁴⁷
4. Loans (giving and receiving);⁴⁸ and 
5. Mortgages.⁴⁹

It is well known that buying, selling, renting, and giving/taking a loan are all permissible so as long as conditions of the Sharia are met (e.g., consent, ownership, etc) and none of the impediments are present (e.g., invalid condition, Riba, etc). A lesser-known fact is that a mortgage is actually allowed in Islam.  

Mortgaging refers to placing an item with a lender in order to secure a loan; collateral in case of non-fulfilment of the loan. This is permissible according to the Quran, the Sunnah, and the consensus of the Scholars.⁵⁰

Allah says in the Quran:

“… And if you are on a journey and cannot find a scribe, then a security deposit [should be] taken.” [Qur’an: 2: 283]

It is also known that the Prophet himself took a mortgage when borrowing from a Jewish trader in Madina.

A’ishah narrated: 

“The Prophet passed away while his shield was mortgaged with a Jew for thirty sa’⁵¹ of wheat.”⁵² 

Hence, it can be seen that there is nothing inherently haram (unlawful) regarding mortgages in enough of themselves. So, what is it then that makes conventional interest-based mortgages a forbidden transaction and therefore clearly haram?

SECTION 3: CONVENTIONAL INTEREST-BASED MORTGAGES 

In a conventional mortgage transaction, four things are taking place: 

1. Buying and selling: person A is purchasing a house from person B, who is intending to sell his/her house.;
2. Borrowing money: Person A is borrowing money from a bank to pay person B for the purchase price of the house; 
3. Mortgage: the bank that is lending the money will only do so by placing the house at their disposal (as collateral) to guarantee that the debt is repaid; and then 
4. Repayment with added ‘interest ’: the money that was borrowed from the bank will now have to be repaid over 25-30 years in monthly instalments with added interest on top of the principal loan. This interest rate is reviewed every two to five years, depending on when the fixed rate of interest expires.   

As we have seen, the above three transactions appear in our classical books of fiqh (Islamic jurisprudence) and are therefore considered to be valid transactions. If that is the case, then why are mortgages considered haram? 

Islamic mortgaging. [PC: Jakub Zerdzicki (unsplash)]

However, the European Council for Fatwa and Research states that it is permissible to use a conventional mortgage to purchase a house in one limited situation.⁵⁴

The scholars who advocate this view still reiterate the clear Sharia position – that dealing with interest is haram (forbidden) and is one of the greatest sins; however, they make an exception to someone purchasing a house for the purpose of residence only.⁵⁵ 

These respected Scholars urge Muslims living in the West to do their best to establish alternatives that are acceptable to Islam, and if a person can rent without causing himself much hardship, then he should be content to do so. However, if a person has no other place to live and does not have enough money to purchase the house outright, and taking a mortgage is the only alternative, they state that a person can do so as long as the following conditions are strictly observed: 

1. The house to be purchased must be for the buyer and his household;
2. The buyer must not have another house; and
3. The buyer must not have any surplus of assets that can help him buy a house by means other than mortgage.

This fatwa is based on the following two major juristic considerations:

Juristic Consideration No. 1: The agreed-upon juristic rule, which states that extreme necessities turn unlawful matters lawful. 

This rule is derived from five Quranic texts, amongst them:

“But whosoever is forced by necessity without wilful disobedience, nor transgressing due limits; (for him) certainly, your Lord is oft-Forgiving, Most Merciful” [Qur’an: 16: 115]

Moreover, jurists have established that hajah (need), whether for an individual or a group, can be treated in equal terms with darurah (extreme necessity). Hajah or need is defined as those things that put Muslims into some difficulty. Darurah (extreme necessity), on the other hand, is that which Muslims cannot manage without. Allah has lifted difficulty as stated in Surat Al-Hajj and Al-Maidah:

“And He has not laid upon you in religion any hardship” [Qur’an: 22:78], and “Allah does not want to place you in difficulty, but He wants to purify you, and to complete His favour to you that you may be thankful.” [Qur’an: 5: 6]  

Any house that meets the criteria set up by the definitions of hajah and darurah, as mentioned above, is one that is suitable for the Muslim family in terms of size, location, locality, and amenities.

The fatwa is built on the rule of darurah or hajah, which is treated in a similar manner to darurah; the Council stresses that there is another rule that governs and complements the rule of extreme necessity and need. This rule states that what has been made permissible due to extreme necessity must be dealt with great care and taken in measure. It should be restricted to the category of people who are in real need of a house. Moreover, this fatwa does not cover taking up a mortgage to buy a house for commercial reasons or for any purposes other than personal use (residence).

Juristic Consideration No. 2: It is permissible for Muslims to trade with usury and other invalid contracts in countries other than Islamic countries. 

This opinion is held by a number of renowned jurists, such as Abu Hanifah, his colleague Muhammad As-Shaybani, Sufayn At-Thawri, Ibrahim An-Nakha`ie, and, according to one opinion of Ahmad Ibn Hanbal, which was declared as true by Ibn Taymiah, according to some Hanbali sources. It is also the declared opinion of the Hanafi school of jurisprudence.⁵⁶

However, despite the arguments put forward by senior scholars such as the late Dr Shaykh Yusuf al-Qardawi (rh), this fatwa has been extensively challenged by many notable scholars⁵⁷, including Dr. Shaykh Salaah as-Saawi (AMJA) in his book ‘A Polite Reconsideration of the Fatwa Permitting Interest-Based Mortgages for Buying Homes in Western Societies.’

Dr Shaykh Salaah as-Saawi argues that the two juristic principles upon which this fatwa relies have been misapplied and therefore the fatwa is erroneous. Here is a summary of his examination of the fatwa:  

(I) Regarding Juristic Consideration No. 1 (extreme necessities turn unlawful matters lawful), Dr. as-Saawi argues:

• In fiqh, hajah (need) is whatever is required for ease and the removal of constriction, which usually leads to difficulty and hardship, accompanied by the loss of benefit. If it is not taken care of, then in general, it causes difficulty and hardship;
• The concessions are only valid to take advantage of when the person is practically involved in their causes, e.g., one intending to travel cannot benefit from the concessions of travelling merely through the intention; rather, he must be practically involved in travelling.
• As for the difference between hajah (need) and darurah (necessity), the two can be differentiated from several aspects, including: 

1) Necessity is more severe than need – necessity is based upon doing what is an absolute must, and a person cannot leave it, whereas need is based on making things easier, which a person can do without; 

2) Necessity allows the forbidden, whether the necessity affects an individual or the community. In contrast, need does not entail allowing the forbidden, unless the need is that of the general community. This is because every individual has unique needs all the time, and it is not possible to have a specific law for every person, unlike necessities, which are rare; 

3) The exclusive ruling that applies to necessity is a temporary allowance of what is forbidden by the text of the Shari’ah. This allowance ends with the disappearance of that necessity and is limited to the person for whom the allowance is due to his necessity. 

• As for rulings which are established based on need, they do not revoke any text of the Qur’an & Sunnah, but only oppose principles and qiyas (analogical reasoning), and they are established in a permanent manner by which those in need and others can benefit from them.

Therefore, even though a home is, without doubt, one of the necessary needs of the human being that must be fulfilled, it does not have to be acquired through ownership only. Rather, this need can also be fulfilled through renting or any other way in which a home can be acquired.

(II) Regarding Juristic Consideration No. 2 (the permissibility for Muslims to trade with usury and other invalid contracts in non-Muslim countries), Dr. as-Saawi argues:

• In the presence of clear, definite texts transmitted regarding the prohibition of riba al-nasi’ah, the evidence, which is assumed to be from the Hanafi school, is very weak and cannot be relied upon; 
• The other widely-followed Madhabs (schools of jurisprudence) did not accept the view of the Hanafis in this matter, and even Abu Yusuf, student of Imam Abu Hanifah rejected this view.;
• Thus, Hanafis do not permit riba or other definitely prohibited matters in non-Muslim countries, as is often mistakenly assumed.

A summary of Shaykh as-Saawi’s study: 

1) The prohibition of riba in both its forms, fadl and nasi’ah (which includes the prohibition of bank interest) must be emphasised and endorsed. This is what was established by all the fiqh assemblies in different parts of the Islamic world; 

2) Riba can only be permitted by necessity. Anyone who is faced by a situation of necessity must turn to the people (of knowledge) who have the authority to issue a fatwa whom the person trusts regarding their knowledge, so that they can determine the extent of his necessity; 

3) Need is treated like a necessity in allowing the forbidden when the required conditions are fulfilled. These conditions can be summarised as follows: 

1. The occurrence of need according to its Islamic legal understanding. This is to repel harm and weakness, which diverts people from engaging in and carrying out the matters of livelihood, not for comfort and luxury; 
2. The absence of valid alternatives. This means that the haram is widespread, and all paths to the halal (e.g., renting) are blocked; and
3. The lack of capability to move to other areas where valid alternatives can be found. 

4) Therefore, the basic principle regarding one who is unable to own a home in a halal way involving no riba or doubt is to be content with renting; 

5) When renting entails difficulty and clear hardship due to the size of the family or other factors, it is allowed to grant them a concession to own a house in this manner, in light of the rules mentioned above. This is only after consulting with the people of knowledge to determine the extent of this need;

6) It is a necessity to provide Islamic alternatives to the problem of financing housing. This is either by creating Islamic institutions or by persuading the Western banks to amend their contracts in dealing with the Islamic minorities in such a way as to agree with the requirements of Islamic Law; 

7) Appealing to those capable in the Islamic world to build investment projects to provide housing for those needing it amongst the Muslims settled in Western societies. Such projects could be via the well-known forms of valid transactions such as musharakah, murabahah, istisna’, renting-ownership schemes, etc.⁵⁸

SECTION 4: ISLAMIC HOME PURCHASE PLANS

“Legal maxims play an important role in interpreting and applying Sharia principles to contemporary financial practices.” [PC: Signature Pro (unsplash)]

A note on the Maxims of Islamic Law (Qawa’id al-Fiqhiyya)

In terms of the acceptance of legal maxims of the Sharia among the scholars, they are divided into the following two categories: a) maxims, which are accepted and utilised by all scholars from different schools of Islamic law (madhabs); and b) maxims that are accepted by scholars from certain madhhabs, but rejected by others. The following are five comprehensive major maxims in Islamic Law (fiqh) that are accepted by scholars from all four of the legal schools (madhabs), even though they may disagree on how they are applied to specific matters of fiqh: 

1. Matters are determined according to intentions; 
2. Hardship entails ease; 
3. Harm must be eliminated
4. Certainty is not overruled by doubt; and 
5. Custom is a basis for judgment.⁵⁹

These five major maxims also have branches that lead to further corollary maxims which can be applied to Islamic financial contracts.⁶⁰

Some of the other important Islamic legal maxims that are applicable specifically to Islamic financial contracts include (but are not limited to):⁶¹ 

1. The default position of contracts is that all contracts and transactions are halal (permissible) and correct, and no contracts can be considered as haram (impermissible) except with evidence from the Qur’an and Sunnah of the Messenger (saw);⁶²
2. All contracts must be free from gharar (gross uncertainty), dhulm (harm), and Riba (usury);⁶³ and
3. The essence of contracts is their goals and meanings, not their words or forms.⁶⁴

Therefore, in order for HPPs to be considered Islamically impermissible, a scholar would have to prove in a substantial way, the presence of one or more of the following in the contract:

1. Gharar (gross uncertainty/ambiguity);
2. Dhulm (harm);
3. Riba (usury);

With these principles and rules in mind, let us now look at Islamic mortgages – more commonly known as Home Purchase Plans (HPP), which are intended to be structured in a way to help avoid Riba. Currently, there are three different types of HPPs:⁶⁵

     A. Ijara (a rent-only agreement – the alternative to the conventional ‘interest-only’ mortgage):

The bank buys the property you want to buy, and you pay them rent with the condition that you buy the property from them at the end of the term.

The bank also leases the house to you for a fixed term at an agreed monthly rent.

     B. Murabaha (profit sale).

The bank buys the property and gradually sells it to you at a mark-up price, which you pay in monthly instalments.

The ijarah model is most commonly used for buy-to-let properties, whereas murabaha is most commonly used for commercial properties. These type of agreements are rarely used for UK residential home purchases.  

   C.