بســـم اللــه الرحــمــن الـرحـــيــم
Our Shaykh, Muhammad ibn Hizaam -may Allaah preserve him- was asked the following question:
The questioner says: What’s the ruling on dealing with these so-called ‘Islamic Banks’ who buy a house on your behalf for let’s say fifty thousand dollars, then sell it back to you for eighty thousand?
This transaction is impermissible, because not only is it a ploy to get around Ribaa, it actually falls under a category from the categories of Ribaa.
The Prophet ﷺ forbade utilising ploys in order to commit Haraam, saying:
((لا ترتكبوا ما ارتكبت اليهود فتستحلوا ما حرم الله بأدنى الحيل))
“Do not do as the Jews did, making Halaal what Allaah has made Haraam utilising the lowest ploys.” [Hadeeth Abu Hurayrah, reported by Ibn Battah]
So this bank, instead of loaning you fifty thousand and telling you to pay back eighty thousand (which is clear Ribaa), they have (utilised a ploy to get around that and have) said, we’ll buy it, then sell it to you. And this itself is undoubtedly forbidden and falls under Ribaa, because they did not make this purchase except to sell it to you, which is why they set up a contract and got you to agree to it beforehand, such that you are compelled to purchase it from them. So they only bought it to profit from you.
Some of these banks may even sell it to you before actually making a purchase! So they agree a contract with you first, then go and buy it! So essentially, they’ve sold you something which they themselves do not own, and the prophet prohibited from selling something which one does not own, as well as profiting from something which one has not yet grasped or taken into their possession. Meanwhile, this bank has sold you something which they don’t even own, let alone grasping and taking it under their possession.
So aside from being a diversion to Ribaa, these types of transactions are in themselves Haraam. So anyone who says they are permissible, is greatly mistaken! He has made a grave mistake!
Abu Ishaq Muhammad Ibn Ahmad Ba-‘Alawi
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