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Buying Houses with mortgages:

Ruling European Council for Fatwa and Research

The Shari'a position is crystal clear; dealing with interest is haram or forbidden and is one of the greatest sins. However, what is the ruling where there is no option but to buy the house with usurious money, especially when you are living in a non-Muslim country?

The committee of scholars, headed by Dr. Yusuf Qardawi met in Detroit, USA in 1999, issued a statement explaining the law of necessity. In summary, it says that if a person is not able to rent a suitable house for himself and his family in a proper location or the rent is too high, in that case he can purchase the house with a mortgage. Even in the case of permission, the scholars suggested that one should exhaust all the other possibilities of purchasing the house in a pure halal way.

The committee stress that it is the duty of Muslims living in the West to exert themselves to have their own financial institutions that help them finance their own projects and establish their economic presence in this part of the world. With this, they will be in no need to resort to usurious loans to purchase houses. The fatwa issued by the European Council for Fatwa and Research, which also consists of the same scholars, discussed in detail several papers concerning the purchasing of houses through mortgages and came to the following conclusion:

It stresses, according to what has been agreed upon by the Muslim Ummah, that usury is forbidden. It is a major sin and is one of the seven gravest ones. Those who commit it are considered to be waging war against Allah, and His Prophet (saw). In this vein, the Council supports what has been decided by Fiqh Councils throughout the Muslim world that bank interests are usury. Therefore, the Council invites the Muslim community to do its utmost to seek Islamic alternatives such as murabahah (sale at a profit), which is practiced by Islamic banks. They should avoid doubtful matters to the furthest extent possible. It encourages them to establish their own construction companies that can build houses and sell them to Muslims with relaxed, less strict lawful ways of payments.

The Council calls upon Islamic organizations throughout Europe to enter into negotiations with European banks to find formulas that are acceptable to the Muslim client. Formulas like Bei` At-Taqsit or sale for deferred payment, where the buyer is required to pay more money due to the fact that payment is not immediate. This formula will help both banks as well as the Muslim community. This formula is in operation in some European banks.

In addition to this, some European banks opened branches in some Muslim countries, where transactions are run according to the Shari'a as in Bahrain. In this regard, the Council would send appeals to European banks to observe the needs of the Muslim community.   If all the above suggestions are unavailable, the Council, in the light of evidence and juristic considerations, see no harm in buying mortgaged houses if the following restrictions are strictly observed:

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

Moreover, jurists have established that hajah or the necessity or need, whether for an individual or a group, can be treated in equal terms with darurah or extreme necessity. Hajah or need is defined as those things which put the Muslim in a difficulty, if not fulfilled, even if he/she can do without. Darurah or extreme necessity, on the other hand, is that which the Muslim 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" (Al-Hajj: 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.) (Al-Ma`idah 5: 6).  Any house that meets the criteria set up by the definitions of hajah and darurah, as mentioned above, is the one suitable for the Muslim family in terms of size, location, locality and amenities.

However, the fatwa is built on the rule of darurah or hajah, which is treated in a similar manner like darurah, the Council stresses that there is another rule which 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 for a house. However, the fatwa does not cover taking up mortgage to buy a house for commercial reasons or for purposes other than buying a personal house for those who do not have one.

Undoubtedly, accommodation is necessary for individuals as well as families and its part of the great blessings which Allah has His servants with, as He says: (And Allah has made for you in your home an abode.) (An-Nahl 16: 80). The Prophet (saw) has explained that a spacious house is one element of three or four elements that constitute the concept of happiness.

Rental houses do not fulfil all the Muslim needs. They do not give him the sense of security, as he/she keeps paying towards rents for long periods of time. He/she might be asked to evacuate their rented accommodation for some reasons like size of the family, or growing number of guests. When getting older or if benefits are suspended he/she might even be subject to eviction. Buying one's own house spares Muslims all these discomforts and helps them to be in the immediate vicinity of Mosques, Islamic centres or schools as it helps them build up their smaller Muslim community within host countries where families get to know each other and work to establish their cultural identity.

Purchasing a house also helps the Muslim family to modify it to accommodate their social and religious needs. Besides all these individual benefits, it helps the Muslim community, being a minority, to free themselves from the financial pressure that renting accommodation often causes, and focus their attention on dawah. This cannot in fact be possible if the Muslim family works all the time just to cover the expenses of their rented accommodations as well as their living.

The second criterion upon which the fatwa is based is the juristic verdict which claims that 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 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. What makes this last criterion accommodates our fatwa is a number of considerations, amongst which are the following:

1. According to the Shari'a, Muslims are not obliged to establish the civil, financial and political status of the Shari'a in non-Muslim countries, as these lie beyond their capabilities. Allah does not require people to do things that are beyond their capacity.

2. Prohibiting usury is a matter that concerns the host non-Muslim countries, and which Muslim communities can do nothing about it. It has many things to do with the socio-economic philosophies of the host countries. However, in these countries, what is required of the Muslim is to abide by the Shariah rulings in matters that concerns him in person such as the rules that govern acts of worship, food, drinks and clothes, marriage, divorce, inheritance and so on.

If Muslims choose not to deal with contracts involving usury in non-Muslim countries, this might weaken them financially. Islam is, however, supposed to strengthen Muslims not to weaken them, increase rather than diminish them, benefit and not to harm them.

Some Salafi scholars claimed that Muslims could inherit non-Muslims as this goes in line with the Hadith which says: < not does and increases>, i.e. increases Muslims in power, wealth, etc. Similar in content is the other Hadith which says: 'Islam is superior and none can excel it.'

Therefore, if Muslims are not to trade with these invalid contracts and transactions (where extreme necessity and urgent need is involved), then they will end up paying what is required from them (in transactions that involve usury) without receiving any benefit in return. They will thus be losers as they will be obliged to honour these transactions, and in return get nothing. No doubt, this will bring financial detriments to Muslims.

Concerning cases where the Muslim is the recipient, i.e. the beneficiary, the Hanafis allow usury in and that they permit invalid contracts only if two conditions are satisfied:

First: Where the Muslim is the beneficiary.

Second: Where deception, involving non-Muslims, is avoided.

Arguing against this claim, first we would maintain that in our case, the benefit has not been realized. The second is, the claim has not been authenticated as this has been affirmed by Muhammad As-shaibani - one of the chief scholars of the Hanafi Juristic School and a student of Abu-Hanifah- in his book: As-Siar Al-Kabir. Moreover, earlier scholars of the school did not set up any conditions (regarding trading with usurious contracts in non-Muslim lands). However, in our case even if the Muslim is the giver (of usury) he/she is still the beneficiary as he/she will win an own house after a number of years.

Furthermore, statements forwarded by Muslims living in Europe to the Council through correspondence and/or direct contacts show that payments made through mortgage are equal, and sometimes lower, than those paid as mere rent mortgage. It follows that if we are to forbid usurious transactions, Muslims will be impeded from securing their own house, despite it being one of Al-Hajat Al-Asliyyah i.e. the essential needs, according to the jurists terminology. Hence, Muslims will end up paying towards rents for a number of years without owning their houses, while they can own them if these payments are to be made towards mortgages. Finally, even if this transaction is declared invalid by the Hanifi and those who hold a similar view, it will certainly be permitted where hajah (i.e. the need that is treated by jurists on similar grounds like darurah, which makes impermissible things permissible) comes into consideration.

What makes our argument sound and valid is that Muslims are compelled to take usury, i.e. they do not deal with it on purpose or by their free choice.  The primary criterion for forbidding usury, according to a number of Quranic verses, revolves essentially around taking usury (not giving it). However, giving usury is forbidden only to obstruct pretext, i.e. ways lead to usury, i.e., Sad Atharai. On similar grounds, notaries and witnessing usurious transactions are prohibited.

While taking usurious loans is categorically forbidden, paying interest attached to a loan is permitted if there is hajah i.e., an urgent need as maintained by a number of jurists. It has also been maintained that taking a usurious loan is permitted if there is no other way available.

A famous rule that we could put forward in this regard is what has been made forbidden for an essential reason within the transaction can only be made permissible for cases where darurah i.e. extreme necessity is involved, and what has been made forbidden to obstruct further ways that lead to usury can be made permissible for hajah, i.e. need.



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