Masha'Allah. You can 'bet your house' (pun
intended of course) on a right ding-dong amongst the Muslims once the whole Islamic finance thing gets pulled into the light.
Anyway, I'd just like to make a few points firstly:
1. If any of you were fortunate to have attended Saleem Abu Zubair's lecture at the PG conference in July, then you will know the importance of the rulings concerning the
Mufti and
Mustafti (i.e. the one who asks for a fatwa and the scholar who gives it). This is vital for all people who are asking for or wishing to follow a fatwa. For those who missed it, read an article about it here:
http://www.as-sahwah.com/viewarticle.php?articleID=1168&
2. I cannot reiterate enough (I apologise for those who know this already and are sick of me repeating this) but when there is a discussion of evidences going on between whoever, whether on this forum or any forum, class, lecture, internet board – either you'll be in, or you'll be out! Either you've studied the field and know exactly what's going on and you'll be able to contribute and benefit and maybe even decide yourself what your next step is, or you won't be able to! Only the individual themselves will be able to determine this. As for those who are unable, call them masses,
'awaam, myself Abu Eesa (or whoever you want to keep those people happy who find great offence at 'them' and 'us' and Allah knows what), then you don't! Simple. There is no shame in that, rather only honour. That person has stopped at their rightful limits and will follow their scholars who they trust. That is the only obligation upon them and for them is their reward.
Ok?
Good.
Now, I'd like to make a few comments about the fatwa from Sheikhna Haitham, to illustrate the position of some of the scholars who believe this scheme is permissible. It's not brief unfortunately, and you'll need to be referencing the original fatwa by the Sheikh to follow what's going on. The aim (for those who are very particular about such things) is naturally to provoke debate and healthy discussion with
adab and knowledge. It is not to convince people to take another opinion, it is not to put people down, it is not to cause
fitnah – I'm sure people will make of it what they want – rather it is for those who will benefit from it. For anyone else, all the best to you too!
Firstly, the whole area of using schemes such as the
ijâra scheme to purchase houses has been discussed for years. The senior
kibâr 'ulemâ of the Islamic world have had their own opinions and often discussed them at their International Fiqh Councils, particularly the
Majma' al-Fiqh al-Islami, a branch of the OIC (mentioned by Sheikh Haitham in his fatwa). This whole chapter is called "
al-Ijâra yantahi bit-tamlîk" in the science of Fiqh ("A lease which ends in ownership"), and has been differed over by all the major scholars.
Why? Because it is an area of
Ijtihâd. There are no clear cut right and wrong answers in ijtihâd as you will all know, and one can never criticise the ijtihâd of a certain scholar over another scholar's ijtihâd when the whole issue is one of Ijtihâd! It's simply not possible! This is the first and most important lesson we must learn in such issues.
Emotions often run high in such debates. The whole area of
mu'amalât (all the transactions that affect us in day-to-day life) is very different to the concept of worship in Islam. There is much more space and ease in this field, with the principle that all transactions are permissible until proven haram whereas it is the opposite in worship. This should also be taken note of. Naturally, most of the new areas of discussion in the councils are of the
mu'âmalât type, always issues of Ijtihâd. We don't need to discuss those things which the Ummah have agreed upon, and it's not permissible to differ on them anyway! So how can people get so worked up about these issues?!
Anyway, for those who wish, please refer to the excellent discussions between the
kibâr in the 5th session of the council, held in 1988, between Sheikh Abdullah bin Bayyah, Sheikh Abdullah Muhammad Abdullah, Sheikh Bakr Abu Zayd (may Allah preserve them all) and others. More of the senior
kibâr discussed this issue in the year 2000, at the 12th session of the council, including the masters of this field such as Sheikh Abdullah bin Manî', Sheikh 'Ali as-Sâlûs, Sheikh Abdus-Sattâr Abu Ghuddah, Sheikh Wahbah az-Zhayli, Sheikh Taqi-ud-Dîn al-Uthmâni and so on. Needless to say, many of these scholars allowed the contract to be used. And many of them didn't. Please refer to 12/1 and 5/4 for those who'd like to see the detailed
niqâsh (debate).
As for the HSBC contract itself, here are a few observations against what Sheikh Haitham says. Remember, in such a format, this question/answer format might seem quite rude but the Sheikh (
hafidhahullah) knows better and I hope you all do too:
1. The Sheikh asks what
kind of contract is this? It is a combination contract.
2. He says that
'some scholars have prohibited combined contracts'. Indeed, and many have allowed them. The Sheikh mentions that the Prophet (
sallallahu 'alayhi wa sallam)
'prohibited two transactions in one transaction (al-bay'atayn fi al-bay')' could be applicable here. This has been refuted by many of the scholars of Islam, notably ibn al-Qayyim and ibn-Taymiyyah who said all these
ahadîth refer to what is known as the
'înah' contract (something which Sheikh Haitham actually explains the nature of later in his document). Therefore this argument is not strong and Allah knows best.
3. The Sheikh notes that
'the presence of a significant amount of ambiguity (gharar) invalidates a contract' which is of course true. Naturally a 'small' amount or
'yasîr' amount as the Salaf used to call it, is not a problem. A look at the HSBC contract does not show a significant amount of
gharar and Allah knows best.
4. On page 2, the Sheikh says that the Fiqh Council have ruled,
'that if one cannot distinguish at any point of time whether the client is a tenant or buyer, then such a contract is invalid' referring to Resolution No. 110. It is very clear though that the client is a tenant throughout this contract and the bank is the owner. That is a fact from the details of the HSBC contract. So the above is not applicable and that is why if one reads the same Resolution (110), you will find the Fiqh Council ruled that this contract of ijâra ending with ownership as permissible!!
5. The Sheikh's claim that this scheme is
'closer to a conventional loan' has no evidence. A
'guise' must be proved and the Sheikh has not done that. The Bank remains the owner and Lessor. The Client remains the tenant and Lessee. That’s what the contract states and that’s what the reality shows and Allah knows best. The discussion here enters the well-known debate considering
"al-ibrah bil alfâdh…" and should return to the books of
Usûl-ul-Fiqh for more details.
6. The Sheikh asks '
why the tenant has to pay 10% or such a large sum in a tenancy agreement when the norm would be something much smaller'. The answer is because the Bank has made such a commitment a condition to them entering this contract! The Bank can insist on whatever it likes, such as if you wanted to rent a house from me for £1000 a month and I said to you, but I want £10,000 deposit first. You accept or reject! So there can be no problem here. As for whether it is a 'down-payment' or a 'deposit' then the intention is well understood and Allah knows best.
7. The Sheikh asks '
who pays the insurance, and then asks about who will pay other costs' etc. The fact is that the Bank, like any landlord, has come to a deal with the Client. If the client wishes to pay for all such costs, it will be down to him. If the Client wants the Bank to deal with everything then the Bank will willingly do so, but will increase the rent. Indeed quite rightly so. Again, the tenant and landlord can agree to anything they wish between themselves as long as that issue is not haram. This does not affect the overall contract of ijârah. In the HSBC contract, the Bank has calculated all its costs and evaluated the market rental rates and has come to a final rental cost per month. This default sum means that the Bank will cover any costs from loss or damage to the property and the client will not be liable for one penny, unless the Client takes on that responsibility themselves. His rent will decrease accordingly. This is all in the legal contract signed by the two parties, and has been confirmed to me by the head of Amanah Finance (HSBC), Noman Hasan.
8. The Sheikh notes that
'if the tenant decides to pull out, he will lose all payments that he has made to the Bank if the property has depreciated in value.' We ask, where is the problem in that?
The fact of the matter is the Bank only became involved in this contract because we approached them to buy a house at their risk, so that I could rent it from them for a set period of time until I gather enough money to buy it outright. The Bank agrees, covers it costs, calculates it risks and profits and then goes and purchases the house, taking ownership, and then gets a promise from us that we will not 'cheat' the bank and run off halfway through! It does this by making us commit a large deposit to show our intentions etc. Now, if for example, I decide to change my mind and go elsewhere or I have become redundant from my job and I cannot afford the rent anymore – what happens now?
As a tenant, I should be allowed to stop this agreement. And indeed I can. But what about the Bank now? Is this fair to the Bank that I have placed it in such a position? Of course not, but that is the risk that the Bank takes in this contract. This is what makes the contract essentially halal according to many of the scholars. What the Bank will do is to demand it is recompensated for you pulling out of a legal agreement to rent this property for 20 years. So it will ask you to return its original investment which you can only do by selling the house. If you sell if for more, the Bank allows you to keep the profit if you wish. If there is a loss, then the Bank will want to reclaim its loss (which it only incurred because you wanted them to get involved in such a contract) and whatever money they have of yours will be used to offset the loss. Let us suppose that they have £10000 of your money but the property has depreciated by £50000. And you do not have the remaining £40000, then what happens now? The Bank loses £40000. That maybe not fair on the Bank but that’s the risk the Bank took.
This is important to understand for in a conventional mortgage, the Bank will pursue you to the very end to reclaim its lost money. Here in the Amanah contract, the Bank accepts the risk and will accept your claim of bankruptcy and accept the loss. This is again in the legal contract and was confirmed again by Noman Hasan.
9. The Sheikh (
hafidhahullah) then says that these points
'when taken as a whole, such practices may invalidate the contract.' The reality is that each of these points provide no evidence to show a problem either individually or collectively and Allah knows best. And 'may' is not good enough to make the entire contract
harâm.
10. The Sheikh again repeats that all the risk is being borne by the Client. This is incorrect as we have shown above and therefore this point is invalid and Allah knows best.
11. The Sheikh gives a good example of how individual halal components may produce a haram collective contract. This is not applicable here and therefore an invalid analogy.
12. The rest of the document discusses related issues. In conclusion to these points, the Bank whether run by disbelievers or believers is out to make profit. It does so by the size of its capital and being able to minimise its risks. This is called business,
wa hallallâho al-bay'. We as the consumer want to find a way of being able to use the financial power of these institutions to our benefit, i.e. to gain our basic human right of owning our own houses. They will condition certain things and we will accept them or leave the contract and look elsewhere. The Bank is taking on a risk whatever anyone claims and therefore its profit is permissible due to the level of risk.
And Allah indeed knows best.
Just to finish with few important points: What I have written above is of course not my own work rather it is simply translating and putting into reality what many of the senior scholars who allow this scheme have said in defence of the ijârah contract, such as Mufti Taqi-ud-Dîn, Sheikh al-Manî', the Majma' al-Fiqh al-Islâmi, aswell as many many other scholars and Professors around the world, some known, and some unknown, a small few of these experts on Shariah supervisory boards and the majority of the other experts in insolation as such.
I have been able to add a few more details other than present sources because I have been able to, wal-hamdulillah, along with our beloved Sheikh Haitham, attend the seminars held by HSBC and other financial companies where Mufti Taqi, Dr Imran al-Uthmani and Sheikh Nizâm al-Ya'qubi have been present and argued and defended their case. I have been in contact with the Amanah finance team leadership, as has been our Sheikh, and we have both obtained a copy of the contract. Noman Hasan, head of the UK Amanah finance team organised a specific meeting with the head of Amanah HSBC International who travelled from Dubai to meet us (Yasir Qadhi and Tawfeeq Chowdhury) in Madinah to have a detailed discussion surrounding the contract.
I have also had recourse to many legal experts who have been working on the details of the ijârah contract for a few years now and so have been able to clarify a few legal points too.
And Allah knows best.
Again, I am not here to tell you to take out an ijârah contract. If I did, I'd want at least £10000 per person from HSBC, but the Bank refused (that’s a joke by the way). The reality is that the international scholarly community is in difference over this issue. The national scholars in the UK differ over it too. For those who love names, then Sheikh Abdur-Rahman al-Leebi, Sheikh Haitham al-Haddâd amongst others believe that this contract is harâm. Sheikh Abdullah al-Juday', Sheikh Suhaib Hasan, the entire Deobandi school in the UK (following Mufti Taqi) and many others believe the contract to be permissible. And Allah knows best.
What
is an obligation upon us all is to consult those whom we trust in our Deen and follow their advice and NOT to make this issue so divisive as it is turning out to be!
Wa Allâhu Musta'an!!
And I'm knackered now so we can argue some more tomorrow. And yeah, it IS turning into a bit of a blag all this isn't it? Hey, so what? Blog. Blag. What's the difference anyway, they're both tiring...
:-)