For Muslims living in Canada, buying a house from a company that abides by Islamic law that forbids riba or bank benefit has always been a far-fetched dream.
Finally, and after long years of renting houses, Muslims in Edmonton are now relieved, thanks for the launch of the Canadian Halal Financial Corp, The Globe & Mail reported.
The new startup is trying to meet some of the demand for home ownership in Alberta’s Muslim community.
Basing its work on two fatwas, one from Al-Azhar and the other from a committee at Al Rashid mosque, the company was founded by Thomas Lukaszuk, a former provincial MLA and cabinet minister, and John Stainton, a businessman and lawyer.
“This is the fastest growing segment of the Canadian population that was excluded from Canada’s real-estate market,” Lukaszuk said. “It’s extremely, personally, very rewarding. But it took a lot of effort.”
In Islam, loans for profit are always connected to real economic activity, like products, benefits and services.
The purchaser, investor, or financer is guaranteed a return based on the profit generated by that real activity. It is not possible to extend a loan for any profit that is not a direct share of the return on real activity.
As for an interest-based loan, liability to pay a return is incurred without being connected to real economic growth. This is why Islam prohibits it and permits alternative instruments like cost-plus deferred payment (bay` ajil) and advance payment of goods (salam).
Imam Mahmoud Omar, who travelled to Egypt to get approval from scholars at Al Azhar University, said the company launch “was a big hit and big news.”
“Imagine that when someone is renting for the past 20 years and it’s like, finally, you guys made it possible for me to own my house. It was an emotional time,” imam Omar added.
One buyer, Nadeem Rahman, came to Canada in 1998 and has been renting a house since he came to Edmonton in 2021, said having a mortgage from a company recognized by his mosque and Al Azhar to having a prescription signed by a doctor.
“I can take this medicine,” he said. “It takes the burden away from us. It gives a very big and strong confidence going with them. … It’s just like a big door opened for a lot of people.”
Islamic finance has grown substantially in recent decades across the world, becoming one of the fastest growing financial industries.
Today, it has global assets exceeding $2 trillion and expected to reach $3.8 trillion by 2023.
Sharia-compliant finance differs from conventional banking in key ways, the most notable being a prohibition on charging interest and investing in ethically compliant companies.
Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.