The Applicability of Ijarah Al-Mawsufah Fi Al-Dhimmah in Malaysia

Abstract

Purchasing a house under construction is definitely a risky investment for both homebuyer and financier. An Ijarah mawsufah fi al-dhimmah (forward lease) is a method of leasing where the lessor accepts rent prior to the delivery of an asset or property. The rental paid is refunded if the asset is not delivered. This paper aims to examine the legality of forward lease and its applicability in Malaysia. Based on a review of scholarly papers and secondary data collected from company websites, this paper concludes that the benefits of using Ijarah mawsufah fi al-dhimmah are not fully exercised and more efforts need to be done in order to benefit all key stakeholders.