This form of sale is permissible with the mentioned condition

19-7-2011 | IslamWeb

Question:

Is it permissible to sell real estate units by installments for a set rate of increase? That is, to sell a unit for one hundred thousand Egyptian pounds in cash, and charge 50% to get paid over five years, and 100% to get paid over ten years, and 200% to get paid over fifteen years. Is that lawful or not? Does the transaction involve Ribaa (interest or usury), or is it sale by installments? Please explain.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu 'alyhi wa sallam, is His slave and Messenger.

 

It is permissible to engage is this deal, because it is a form of selling by installments. However, this is provided that the sale is conducted for one fixed duration and at one price; that is the buyer will buy the commodity for a definite price that is scheduled to be paid over five years. But if he delays the payment for up to ten years and is therefore charged another price, then this would be the forbidden Ribaa.

 

Allaah Knows best.