Question
Asalamalaikum, I have few questions regarding employment, partnership in Melbourne, Australia 1) Is it permissible to work for a builder to construct houses? Majority or all the houses are mortgaged from the bank so the money builder receives is directly from the bank. Is this money halal? 2) Will it be permissible to become an active partner in such a building company and work with the other partner and share agreed profits? 3. Builder is looking to engage mortgage broker to be on site to arrange finances for clients from various banks. Will this be permissible if I am an employee and/or partner? 4. Also, In Australia all builders need to have insurance (mandatory) to cover costs of clients building site (construction). Without insurance, builder will not be allowed to construct. 5. Can I invest in a land development project with a 3years turnaround time in profit/loss sharing agreement? Iam looking to invest $200k with 9other partners ($2M project). Profit or loss will be distributed by the project owner based on profit percentage. Is this permissible? Note: Builder himself is not engaged in any interest or loan from bank, neither am I. Iam asking this as I have an offer to join a builder as an employee (with fixed salary + commissions) or partnership. Your response is much appreciated. JazakAllah Khair Shakeeb Khan
Answer
In the name of Allah, Most Compassionate, Most Merciful,
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Dear Brother Shakeeb,
We apologize for our belated response.
1) The underlying contract to build a house is between the company and the client. As the client may not possess the sufficient funds to pay for the project, they have approached a bank. The bank is simply paying the building company on behalf of the client. Hence, the company is not directly involved in any interest. Rather, the company is profiting from the service provided to the client. Thus, the money is Halal and permissible to take.
2) It is permissible to become a partner in a building company.
3) A mortgage broker is an intermediary who brings borrowers and lenders together. A mortgage broker seeks the best fit in terms of the borrower’s financial situation and interest-rate needs. They also gather paperwork from the borrower and passes that paperwork along to a mortgage lender for underwriting and approval purposes. The income of a mortgage broker is generally a commission from the financing carried out. [i]
Accordingly, a mortgage broker is involved in the sin of seeking out a conventional loan. Thus, having such a service on your premise is tantamount to assisting in sin.
4) In principle, all types of conventional insurance are impermissible. However, one will be excused if subscribing to insurance is a legal requirement. Accordingly, if the Australian government mandates such insurance one will be excused.`
5) In principle, the profit that results from the partnership may be distributed according to pre-agreed ratios. However, in terms of losses, the ratio must be proportionate to the capital invested. Accordingly, the partners may mutually agree on profit ratios. However, as you have contributed 10% of the capital, you must bear 10% of the loss. [ii]
[i]
https://www.investopedia.com/terms/m/mortgagebroker.asp
[ii]
An Introduction to Islamic Finance, p.24
And Allah Ta'ālā knows best.
Answered by
Mufti Mirza-Zain Baig
B.Ed, CSAA
Montréal, Canada · Canadian Centre for Islamic Research and Ifta
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