Is an Adjustable Rate Lease susceptible to gharar?
SHAPE™: The scholars over time have allowed a great deal of flexibility in fixing lease rates, which may be fixed for the duration of a tenancy, subject to changes in inflation or other indexes, or changed periodically according to mutually accepted terms. Query: Some people say that in both the Islamic and the traditional mortgage systems, the price of the house is simply the discounted future value of the house plus a rent for staying in that house…nobody will let you stay in the house for free. SHAPE™: This is not correct. In the traditional mortgage system, interest is the “rent” of money and is paid for a loan of money with which you buy a house or refinance an existing loan. There is no rent of the house as you own the house. Query: How is the SHAPE™ Ijara MALT™ lease rate determined? Why is it based off the 5yr T-Bill? How does this gauge the market? Is there anything else that can be used to gauge the market other than an interest rate? SHAPE™: All SHAPE™ providers must quote
