Islamic Contract of Ijara to Solve UK Housing Affordability Crisis?

The UK Deputy Prime Minister Nick Clegg proposed “rent-to-own” scheme is based on the long established Islamic contract of Ijara. The scheme was announced during campaigning for the UK national election. The Deputy Prime Minister stated the intention is to create 30,000 rent-to-own homes by 2020 based on this model.

The proposal would give people without a deposit the option of paying monthly instalments towards the cost of a home, without having to raise a deposit. After 30 years of such payments, the buyer would own the home outright.

Ijara Contract

In an Ijara contract one party purchases and leases out the equipment required by the client for a rental fee. The duration of the rental and the fee are agreed in advance and ownership of the asset remains with the lessor.