What is the Islamically correct way to contract a property developer to build a house for you?

Q: A buyer agrees with a property development company that they will pay the full price now for a house/flat now even though the property is still under construction. Once the house is complete, the buyer will then move into the property. During the period of construction, the property development company will pay rent for the land to the buyer until the property is complete.

Is this allowed? Are there any issues with this?


الجواب حامدا ومصليا ومنه الصدق والصواب

A: The appropriate mode of finance for the construction of a property is istisnā’. The buyer may pay up front but the property will only be transferred over to him once it is constructed.  Therefore, there is no  basis on which he can claim any rent.  In the event that the buyer already owns the land and requires the development company to pay rent then this is the joining of two contracts in to one (and so is deemed impermissible as such joining is a breach of Sharī‘ah guidelines).

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