IHC’s structure and operations are reviewed and guided by qualified scholars to ensure alignment with Islamic financial principles.

· Sheikh Iqbal Nadvi

· Sheikh Abdullah Idris

· Dr. Idris Zubair

Conventional Mortgage:

A conventional mortgage is based on a lender–borrower relationship. A bank or financial institution lends money to purchase a property and charges interest on the loan. The generation of profit through money lent (interest) is considered Riba in Islamic finance.

IHC Model:

IHC uses a cooperative investment model rather than a lending structure.

· IHC invests directly into the property and becomes a co-owner (title holder).

· Members pay occupancy charges (rent) based on IHC’s ownership share.

· Members gradually increase their ownership by purchasing additional shares over time.

This structure is rooted in the Islamic principle that trade and investment are permitted while usury is prohibited:

“Allah has permitted trade and forbidden usury.” — Surah Al-Baqarah (2:275)

Comparing monthly occupancy charges directly with fluctuating bank interest rates can sometimes make IHC appear slightly higher in the short term. However, a meaningful comparison should consider the total cost over the lifetime of ownership.

Historically:

· Many IHC members have paid off their homes in significantly shorter periods (often under 10 years).

· Lump-sum share purchases directly reduce future occupancy charges.

· The model encourages accelerated ownership rather than long-term debt servicing.

When total payments are compared — including long-term interest costs typically paid to banks — members find the overall cost through IHC to be significantly lower than Banks.

Some individuals reference a widely known fatwa associated with Sheikh Yusuf Al-Qaradawi permitting conventional mortgages under specific conditions. However, this ruling includes strict stipulations and must be understood in full context.

Key considerations include:

· The permissibility was tied to situations where no viable Shariah-compliant alternative exists.

· The property must be for primary family residence.

· Necessity conditions were emphasized.

Today, multiple Shariah-compliant housing models exist in North America, including cooperative structures like IHC. As such, many scholars consider the original conditions of necessity to be more limited in applicability.

Individuals are encouraged to review the complete ruling and consult qualified scholars before relying on summaries or excerpts.

IHC currently applies an occupancy charge equivalent to 6% annually on the amount invested by the cooperative in the property.

From a Shariah perspective:

· The specific method used to determine rental pricing does not impact permissibility.

· What is required is transparency, clarity of terms, and the absence of uncertainty (gharar).

· All costs are disclosed upfront, with no hidden or unexpected contractual obligations.

A fixed rental rate is comparable to a landlord setting a rental price for a property. As long as terms are clear and mutually agreed upon, the arrangement remains permissible.

IHC does not share in appreciation or depreciation at disposition prior to full transfer of ownership. This structure exists for two primary reasons:

1. Regulatory Requirements: IHC’s Offering Statement, filed with provincial regulators (formerly FSCO and currently FSRA), requires protection of investor capital from downside risk. Since Shariah does not allow participation solely in profits without exposure to losses, IHC avoids profit/loss sharing entirely.

2. Shariah Guidance: The Shariah Board permits this structure because the exit or purchase decision is initiated by the homeowner. Therefore, financial outcomes associated with disposition are borne by the homeowner rather than the cooperative.

Historically, occupancy charges were calculated using average market rents for comparable properties. To improve transparency and eliminate ambiguity, IHC has standardized the rate at 6%.

The method used to determine the rental rate does not affect Shariah compliance, provided terms remain clear and mutually agreed upon.

In the cooperative’s history, payment difficulties have been rare. When challenges have arisen:

· IHC has worked collaboratively with members to develop solutions.

· The cooperative has not needed to force a sale or remove a homeowner to recover funds.

Members are encouraged to communicate proactively if financial difficulties occur so that supportive arrangements can be explored.

IHC does not borrow from banks or conventional lenders.

All funding comes from member share subscriptions, creating a cooperative pool of capital used to acquire housing units.

IHC operates using a Musharakah Mutanaqisah (Diminishing Musharakah) structure.

This model involves:

· Joint ownership between the cooperative and the member.

· Gradual transfer of ownership as the member acquires additional shares.

· Occupancy charges based on the cooperative’s remaining ownership portion.