Is a sale-and-leaseback halal?
Selling a home and renting it back can be a real transaction: the buyer owns and insures the home and charges rent for its use. It becomes a disguised loan when you must buy it back at the same price, so that the “rent” is really interest on the cash you received.
The guidance
I sell my home to a financier and stay on as a tenant. What are the terms?
- A real sale; the buyer owns and insures it, and I rent it backHalal · Lease · IjaraIf the sale is genuine, the buyer carries the risks of owning the home and may charge rent for its use. Any buying back later must be a separate deal, not a condition of the sale; otherwise it is a loan in disguise.Buy back at market value or at a price agreed at that time. AAOIFI also requires a real gap in time between the sale and any lease-to-own.
- I must buy it back at the same price, and the rent works like interestHaram · Riba · Loan with benefitA sale on condition that you buy back at the same price is really a loan with your home as security. The rent is then a benefit taken from a loan, which is riba.Other views: Some later Hanafi jurists in Central Asia allowed this "sale with right of return" as a kind of pledge. Even then the lender may not profit from it, and the OIC Fiqh Academy rejects it outright.
People also ask
Can I agree to buy my home back later?
Any buying back must be a separate deal at market value or at a price agreed at that time, never a condition of the sale. AAOIFI also requires a real gap in time between the sale and any lease-to-own.
What is bay’ al-wafa’ and is it allowed?
A sale with a right of return, once tolerated by some Hanafi jurists in Central Asia as a kind of pledge. Even then the lender could not profit from it, and the OIC Fiqh Academy rejects it as a loan that generates a benefit.
Is equity release halal?
Conventional equity release is a loan secured on your home with rolled-up interest, which is riba. A genuine sale and leaseback with an independent buyer can be halal.
Related questions
All questionsThe four schools on riba
This guidance follows the Hanafi school as applied today by Mufti Taqi Usmani and the AAOIFI standards. Notes mark where the Maliki, Shafi’i or Hanbali schools differ. The four schools on riba →