Renting and buying flat/house

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#1 [Permalink] Posted on 21st April 2018 08:54

With house prices being really expensive in the UK and difficult for many including myself to purchase a house first time without a mortgage which is classified as haram due to the interest involved is just about impossible. I was thinking maybe rent privately. However with private renting I could end up paying around £40,000 in five years and have nothing to show for it as I won't have any property to show for it. I wouldn't be eligible for housing benefits so social housing would be out of the question. 

Even with saving money it would still take 10 to 15 years to get me enough money to buy a house outright.

I am aware of Islamic mortgage however to me that just seems  a bit of a rip off as you end up paying extra just so you avoid paying interest.

Just wanted to ask if anyone has privately rented long term or has privately rented most of their life and their experience of it.

Any other suggestions woulkd be appreciated.

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#2 [Permalink] Posted on 21st April 2018 14:00
I am aware of Islamic mortgage however to me that just seems a bit of a rip off as you end up paying extra just so you avoid paying interest.
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#3 [Permalink] Posted on 21st April 2018 15:39

Disclaimer: I am not promoting Islamic banking OR recommening people to get Islamic Mortgage, just correct facts. I couldn't care less about the "permissable" decisions people make about their finances, your business.

I do happen to know about finances (conventional and Islamic) and its people's decision what they do with their money.

There are reasons why Islamic banking is cheaper and more secure and reasons are not Shariah related but how (Ethical) banking works and what HSBC gets out of it.

Malak wrote:
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You actually pay less!

But never mind...

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#4 [Permalink] Posted on 21st April 2018 16:13
Muadh_Khan wrote:
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Not really my brother.

I looked at all my options and Al Rayan Bank was much more expensive overall.

It would've been cheaper to go with Barclay's or HSBC. In the end, ended up going as halal as possible and took the more expensive route.

Another thing I've found is that their rates vary depending on the type of purchase.
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#5 [Permalink] Posted on 21st April 2018 16:37
Muadh_Khan wrote:
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I wrote a whole post saying how that statement the brother made was incorrect and when i was done the only thing that remained was his statement.

***I didn't mean to say this: I am aware of Islamic mortgage however to me that just seems a bit of a rip off as you end up paying extra just so you avoid paying interest.*****
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#6 [Permalink] Posted on 21st April 2018 17:01

Asaaghir wrote:
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The Admin and Surveying fees of Ar-Rayyan were/are in excess of £850.00. Told my friend to tell them that if they want his business to slash it down to 0 OR he will take his business somewhere else. They said it was not possible so he walked.

Guess what happened the next day?

Over 250K Mortgage over £799.99, guess which figure wins?

But you know best.

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#7 [Permalink] Posted on 22nd April 2018 22:23
Muadh_Khan wrote:
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So if I understand correctly what you're saying is that Islamic banking is cheaper?

Also is it worth renting privately over a long time?
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#8 [Permalink] Posted on 23rd April 2018 10:56

For those with an Open Mind:

Disclaimer 1: If you are of the persuasion that Islamic banking is “Halalaisation” of Interest and your mind is made up, this post is not for you.

Disclaimer 2: I am neither promoting Islamic banking nor asking you to get an Islamic mortgage, I (as always) merely present facts. Disagree if you wish and there is no problem with that.

Shariah Problem with Islamic Mortgage:

The problem with Islamic mortgage isn’t what a famous Mufti keeps moaning about. The problem isn’t even what the Scholars of Karachi keep castigating Mufti Taqi Usmani (HA) about!

The Islamic problem is that Islamic mortgage is essentially two contracts rolled into one:

  1. Contract 1: I can lend you 5,000 USD and you pay £153.89 for 36 months at the rate of 7%
  2. Contract 2: I can lend you 5,000 USD BUT I say for my Services you need to pay me back 5,540.20 and you pay £153.89 for 36 months

There are many Scholars who “correctly and rightly” say that you cannot have multiple contracts for the same transaction. There is no need to look beyond this problem into interest or (lack of interest), this entire issue is deeply problematic to begin with.

Sceptics are right in the sense that “Islamic mortgage” is a legal jargon filled transaction designed to get around the traditional “Haram Mortgage” transaction. In reality and in effect, the net transaction is no different. Let me illustrate this to you by an example, suppose you want to borrow money from me to get a car, I can do this in two ways. Suppose that the car costs 5,000 US Dollars here are two ways:

  1. Interest Based:I can lend you 5,000 USD and you pay £153.89 for 36 months at the rate of 7%
  2. Service Based: I can lend you 5,000 USD BUT I say for my Services you need to pay me back 5,540.20 and you pay £153.89 for 36 months

1 is Haram

2 is not directly Haram as long as we both agree and come up with some legal mumbo-jumbo. In essence, both have a difference where the service fee does not change with the term. And the opposite of above would also hold true in the two models. If a person delays the payments, then beyond 36 months, the base interest rate of 7% will still be charged, plus any penalty that may come forward. Where as in the service based islamic banking, the bank will have a big challenge to figure out how to penalize the delay since they cannot just charge penalty upon the delay in the loan as that would be Riba'.

Mufti Taqi Usmani (HA) responds:

15 years ago this was put to Mufti Taqi Usmani Saheb (DB) that isn’t Islamic Mortgage (HSBC) just legal mumbo-jumbo to get around the Interest prohibition? Mufti Taqi Usmani Saheb (DB) replied that Islamic Mortgage isn’t perfect but it is for the convenience of Muslims to avoid Haram, it is the best solution we have at this time when we don’t control the financial markets and world economy and there is always room for improvements.

A student of Mufti Taqi Usmani (DB) answered by using this example:

Suppose while driving in UK you want to turn right (or left in US and the example will make sense). You see a Petrol Station (Gas station for US) and instead of going to the traffic lights and turning right properly, you cut across the station and save time and keep on going. This isn’t strictly illegal but it may be not the right behaviour or up to ethical standards of driving.

Islamic Mortgage isn’t “Strictly Haram” but it isn’t agreed upon “Halal” according to all scholars either. This is where Taqleed comes in, I had this argument on Sunniforum with the then (student and now Mufti) Abu Hajira. As a layman Muslim, Allah Ta’ala commands you to make Taqleed so if you choose to follow someone like Mufti Taqi Usmani (HA) and get an Islamic Mortgage or any other (well known and trusted scholar for that matter), there is no sin on you!

This is the bottom line you need to grasp!

YOU WILL NEVER GET ALL THE SCHOLARS TO AGREE ON ISLAMIC BANKING OR ISLAMIC MORTGAGE BECAUSE IT IS AN ISSUE OF IJTEHAAD!

What is in it for the Banks?

Banks are in there to make money and Islamic (banking) or Mortgages offers the following advantages:

  1. Statically,  Muslims are financially stable with stable families and pay loans back because it is bred and drummed into Muslims to look after their families so loans to Muslims are less risky.
  2. Muslims have close knit families so they are able to pay greater down payment and families often bail those out who are in trouble
  3. Muslims are a financial powerhouse in the world and ready to invest
  4. MOST IMPORTANT: Banks have to show a reserve against which they are given permission to lend against. Islamic Mortgages means that they have to ring-fence certain money which CANNOT be invested into what you would deem "high risk investments" and this secures their bottom line. So by investing in "Islamic Banking" they are able to leverage this amount TWICE

Muslims are their own worst enemies!

There was a time when HSBC, IBB, Bank of Kuwait etc were all competing in the UK for Muslim businesses. Barclays was also trying to get into the market but BECAUSE Muslims are “stupid” and short-sighted they didn’t kept discussing Fatwaas and market has now narrowed with HSBC and Barclays falling out. This means that you have niche banks in the business and with the lack of competition, customer lose out. Scholars should have sat together and worked out better contracts and agreed with each other for the sake of British Muslims INSTEAD

You have some scholars who have made a killing by earning money WHILE others are crying Haram, Haram and normal Muslims are confused!

WHAT SHOULD HAVE HAPPENED is that Muslims should have made sure that banking scrap and fight for their money (like what happens in the traditional market) and ensured that Islamic Mortgage is diversified as a viable product for everyone. Islamic Banking is just another form of ethical banking and that is why world’s top banks are offering it worldwide.

Islamic Mortgage is a niche product which is limited (or we have made it limited) and the competition is making it more expensive when it was actually cheaper.

Islamic Banking: ASKIMAM Fatwa

askimam.org/public/question_detail/31169

I have a question, sorry if it its daft thing to ask but im confused...The end result of Islamic Banking and Conventional Banking is the same ..thats what i think so how come they appear similar?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

We understand your question as, “If the end result of Islamic Banking and Conventional Banking is the same, what is the difference between the two?”

Please take note of the following points/comments:

1). The “end result” of every Islamic Banking product/model is not the same, let alone (each product) being similar to Conventional Banking models. Hence, your statement is too general.

2). Many products are being advertised in today’s market as “Islamic,” yet, they are not in conformity to the laws of Shariah. We also condemn such advertisement and oppose such practices.

3). The mere fact that the end result of two things is the same, does not necessitate that both should be given the same ruling. Consider the following hadith to understand this principle clearly:


[1]A Sahabi brought high quality dates from Khaibar to Nabi salla Allahu ‘alaihi wa sallam. Nabi salla Allahu ‘alaihi wa sallam asked, “Are all the dates of Khaibar like these?” The Sahabi replied in the negative and said, “We take one saa’ (a measurement for dry items) of high quality dates for two saa’ of inferior dates. Nabi salla Allahu ‘alaihi wa sallam said, “Don’t do this. Rather, sell your two saa’ of inferior dates for a few silver coins. Then buy the high quality dates with the same coins.”

Apparently, there is no difference between the two transactions; the end result is the same. The Sahabi would still end up with one saa’ of high quality dates and the other with two saa’ of inferior dates. However, in the first transaction, the Sahabi was involved in interest (Like-items which are weighed or measured in volume cannot be sold in excess). Nabi salla Allahu ‘alaihi wa sallam saved the Sahabi from interest by proposing two separate purchase/sale agreements. Excess in a purchase/sale agreement is called profit. Whereas, excess in like-items which are weighed or measured in volume is interest. Using end results to justify the method(s) adopted was the philosophy of the polytheist of Makkah. They said,

الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ذَلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا (البقرة: ٢٧٥)


Those who are involved in interest will not stand-on the Day of Judgment- except like the one who the Devil has driven crazy by his touch. That is because they said, “Sale is just like interest.” Whereas, Allah has made sale permissible and prohibited interest (Al Baqarah: 275)  

It is clear from the above, the kuffār use to deal in interest and justify it by saying the excess in interest is just like profit in sale. As Muslims, we cannot accept interest to be like profit.

If present-day Islamic Banks are able to save the public from interest by structuring contracts which are in conformity to the laws of Shariah, then whether or not their end results are the same as Conventional Banks, their efforts will be noteworthy and acceptable. Of course, the contracts must not have ribā’, gharar, and other non-Islamic elements hidden behind a string of words. Furthermore, the contracts must not be a mere theory, but should be implemented appropriately as well.

If you have doubts on a specific product, you may send us details of that product for our observation.

And Allah Ta’āla Knows Best

Hisham Dawood

Student Darul Iftaa
Chicago, USA

Checked and Approved by,
Mufti Ebrahim Desai.

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#9 [Permalink] Posted on 23rd April 2018 11:46
What does fixed up to certain percentage FTV and discounted up to certain percentage FTV mean on Al Rayyan website.
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#10 [Permalink] Posted on 23rd April 2018 11:47
The finance amount box on their website. Do you put down the amount you like to borrow or is it including the deposit
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#11 [Permalink] Posted on 23rd April 2018 15:14
@brother Muadh.

Excellent as usual with the explanation.

Like I said, from experience on a personal level:
Muadh_Khan wrote:
the competition is making it more expensive when it was actually cheaper.


Getting a few hundred pounds discounted or removed still wouldn't help.

The payback in percentage was/is much higher than normal high street banks, so we'd end paying more with Al Rayan.

But it's better to pay here rather than in the hereafter.
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#12 [Permalink] Posted on 24th April 2018 07:35

Asaaghir wrote:
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You are confusing matters. IBB (or Ar-Rayyan) has high Admin fees but the loan, its rates and paybacks are still not expensive.

Is it the absolute cheapest (now), no I am not claiming that.

For some people the choice may be between absolute Haram and making Taqleed of some scholars. Do not become the means of pushing people out of your haste into dark corners.

You have your mind made up and I understand and respect that.

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#13 [Permalink] Posted on 24th April 2018 13:04
Muadh_Khan wrote:
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MashaAllah, nicely explained. Much appreciated.
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#14 [Permalink] Posted on 24th April 2018 14:04
Post edited.
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#15 [Permalink] Posted on 24th April 2018 19:46

Malak wrote:
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Just because the end result of two things is the same DOES NOT mean that it is the same thing, please understand that. I have now added an ASKIMAM Fatwa, read it carefully and in summary:

  1. Islamic Banking could be Haram
  2. Islamic Banking could be permissable.

So the things need to be looked at as a case by case basis.

Disclaimer: Once again let me end by saying that I am not asking anyone to get an Islamic Mortgage OR not get an Islamic Mortgage, that's your choice....From a Shariah perspective make Taqleed of a Scholar (or group of scholars) whose Taqwa and knowledge you trust and that is all you need to do from an Islamic perspective. Opening threads on forum and getting into debates will not help your Deen, following Ulama in matters will.

At the end of the day this is a matter of Ijtehaad so either way you are making Taqleed of a scholar.

Big Picture: This is just like (digital) photography i.e. you can call all the scholars who permit digital photography and those who follow their ruling Shaytaan, Dajjal, Bootlickers and curse their women-folk etc etc etc; it doesn't matter you are still making Taqleed and so are others!

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