An Islamic home ownership program has been launched in Auckland by Islamic Ijarah Homes Ltd (IIH) to cater for Muslims who by Islamic law are not allowed to pay interest, or ribah. The program is modeled on 'Ijarah Wa Aliqtina' or 'lease ending into ownership'. Director of IIH Farouk Shah said he "is confident that the product has a market and meets the minimum requirements for Muslims to own houses without having to pay ribah or interest." On its website, IIH says that "the program acts as a way to pay off a house over the same period as a bank mortgage (up to 30 years) without paying interest (prohibited by Sharia Law)." It works by IIH purchasing the house for the customer, who signs both lease and option to buy agreements. The lease payments are set at the start of the term and do not change. "Any increase in value of the property belongs to the customer. The risk of loss is shared jointly by the customer and the investor. This is because the option agreement gives the customer the exclusive right, but not the obligation to purchase the property, meaning the risk of loss (decrease in value) to the customer is limited to the amount of deposit." Ijarah Wa Aliqtina is one of the newly introduced modes of Ijarah (lease) contract and is one of the initiatives Islamic Ijarah Homes Ltd has taken of introducing Halal or permissible methods of creating wealth for Muslims in New Zealand, it said. Farouk Shah's experience in Sharaiah based Islamic Finance comes from having worked for Habib Bank of Pakistan who are considered pioneers of Islamic Finance.
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