|The desire for economic security is a fundamental aspect of human nature. In society, the distribution of resources and commodities is regulated by the governing authority, which runs affairs according to the particular ideology that the rulers have chosen for the purpose – in our case, Capitalism. Accordingly, the people are restricted and controlled by the systems which prevail over them, and must fulfil their economic needs within the framework of these systems. The issue of our housing is an important aspect of the economic system that we are subject to. We all need a house to shelter from the elements, and as a base for our everyday activities. But, if you think for a moment about your own situation living in the West, housing throws up many problems….
The price of even modest accommodation is staggering. If you take a house suitable for an average family (like your own), the cost of buying it would range from about £50,000 to £100,000 or more, depending on its location. This figure of course, goes far beyond the actual cost of the materials and labor required to build it. In fact, it is usually artificially inflated to create a source of business for banks and building societies from people who have to deal with them in order to buy a house.
Consider yourself. You have to provide for your family – food, clothing, bills, education etc….After all these are taken care of, does your income put you in a position to afford to buy a house? Almost certainly not!
So what are the options available to you?
Renting : This will give you housing, but would you feel satisfied with living with your family in rented accommodation? Most people would not. After all this gives no security for your future – you may have to move from place to place, depending on the whims of a landlord.
This affects your job, your children’s education and so on. The landlord may choose to raise the rent as he pleases.
As well, a large proportion of your income would go towards something for which you have no permanent possession. And since you do not actually own the place, you will have no incentive to spend on it to furnish and decorate it as you like – to turn the house into a home. In all, renting is unsatisfactory – you can never really see a rented home as your own home.
Mortgage : This option seems to be the only feasible alternative. In fact this is the system that most people use in your predicament. In theory, you own the house you live in, paying for it slowly as your income allows, and it appears to solve many of the problems with renting.
Unfortunately, the reality of mortgage does not match its theory. It is riddled with even more problems than renting.
Suffering the Pains of the Mortgage Gamble :
1. With a mortgage, you don’t really own your house. You have to give the regular monthly payments on time, and if you miss even one, you can be subject to repossession of your home. This is whether it is your initial payment, or your last!
2. Your payments do not mainly contribute to the value of your house. Rather you are paying a large proportion towards the interest on the loan you have taken.
3. The payments are subject to the whims of the mortgage company – they can increase or decrease the rates of interest at will, without any discussion with you.
4. Most people never live to actually pay off their mortgage completely and thus really own their house. Thus, they never have anything to pass on to their children.
5. House prices are subject to such fluctuation that the value of the house could drop within a matter of years to even as much as half of the value you bought it for! So you may be paying a debt which you could not recover even if you sold your house!
However, more important than any of these reasons, is Islam’s opinion on mortgage: Getting a mortgage (based on interest) is definitely and clearly haraam (forbidden) to Muslims. The paramount reasons being that,
1) The Muslim has to borrow money on interest. Allah (swt) and His Messenger (saw) have forbidden the taking and giving of interest on money. Allah (swt) says in the Qur’an,
“Those who benefit from interest shall be raised like those who have been driven to madness by the touch of the devil; this is because they say: ‘Trade is similar to interest’ while, Allah has permitted trade and forbidden interest.” [EMQ 2:275]
“O believers, fear Allah and give up the interest that remains outstanding if you are believers. If you do not do so, then be sure of being at war with Allah and His Messenger. But if you repent, you can have your capital. Neither should you commit injustice nor should you be subjected to it.” [EMQ 2:278-279]
Jabir narrated, “The Prophet (saw) cursed the receiver and the payer of interest, the one who records it and the one who witnesses it and he said, ‘They are all alike’ .” (from Muslim, Tirmidhi and Ahmad). Abu Hurayrah narrated that the Prophet (saw) said,
2) The contract of purchase does not satisfy a fundamental condition in Islam. In Islam, if you buy a house, you own the house. In the mortgage agreement, you do not actually own the house but the financial institution owns it until you pay all of your mortgage. You can be kicked out if you fail to keep up with your mortgage payments and all is lost!
Thousands of people lost their homes in this way over the past few years, and thousands more will no doubt follow.
We can see therefore, that this simple issue of housing causes us many dilemmas. However, the Economic System of the Islamic State has solutions to these problems.
The Islamic Alternative
In the Khilafah, it is the right of every individual to have shelter.
The Prophet (saw) said: “The son of Adam has no better right than that he would have a house wherein he may live and a piece of cloth whereby he may cover his nakedness and a piece of bread and some water.” It is therefore the responsibility of the State to ensure that everybody has accommodation to live in.
So, if you are unable to provide accommodation or sustenance for yourself or your family, the Islamic State will provide these for you free of charge, for as long as you remain in that position.
Because of this, the State would devise a deliberate policy to ensure that affordable accommodation is available through extensive home building both by the State and by private individuals who may want to build for profit. The State achieves this responsibility by the implementation of schemes that take full account of individual circumstances, needs and ability when deciding the type of help to give citizens. Thus, if you want to buy a house, the Islamic Economic System provides you with various mechanisms of helping you to do this. These include:
1) Gift from the State: The Khaleefah can give land to you for private use which could include home building. By such grants, it makes it easier for you to provide shelter for you and your family. Such a grant was given to Bilal (ra) by the Prophet (saw) as the ruler of the Islamic State. The Khulafa‘a who followed the Prophet (saw) continued with such grants. The State can also give direct financial assistance to the poor and needy for housing purposes, and indeed it is compulsory for the State to provide this for them.
2) Interest-free loans from the State: If you are able-bodied and working, the State can provide interest-free loans for housing. This is in response to the State’s responsibility for provision of shelter to all citizens.
3) Payment by installments: As an alternative to interest free loans, the State can offer to you accommodation for sale with affordable means of payment.
The above are actions that the Khaleefah can undertake to provide housing as a matter of duty to citizens of the Khilafah whether Muslim or non-Muslim. In addition to these, there are other means through which you may get a source of funding for housing. The Khaleefah would encourage these private sector sources in order to facilitate its responsibility. These include:
1) Qurd hassan from the public: These are interest-free loans from the rich. You could approach wealthy people in the State like businessmen, to secure such a loan. The rich would be encouraged to provide interest-free loans for housing.
2) Deferred payment: Owners of existing properties can sell them to you for a fixed price in the future. The price can either be the same, more or less than the current price, and you could delay payment to such a time when you are able to pay.
3) Awqaf: These are philanthropic institutions set up by individuals to provide housing and other schemes. They give these up for the benefit of the public, for the sake of Allah (swt). You could apply to these institutions for housing.
There is no concept of repossession of property in the Islamic State.
In any of the above means of funding for buying a house, as soon as the contract is agreed, the house becomes entirely your own property. You are free to sell it or keep it as you like, and no one is permitted to take it from you. All that you are responsible for is your debt to the creditor.
Thus, the Islamic State provides a comprehensive Economic System which solves the problem of buying a house.
Buying a House? – An Islamic View