A company financing some person to build a house with materials it does not own
Q: I am an employee and I want to build a house. When I asked
to finance the project with materials, the agent of the company said: We are ready to do that but I, as the owner of the building, should go to those who sell the commodities to give me a fixed price for all the necessary materials which Al-Rajhy will take in the form of bills. The material will be supplied according to my request and with the knowledge of the agent of Al-Rajhy Company. For your information, the materials are as follows: blocks of iron, concrete, cement, sanitary ware and electric materials. Al-Rajhy Company does not own these things but they say that they will possess them in this way. They claim that the board of Al-Rajhy issued a Fatwa that this is permissible. What is your opinion about this? We appreciate your guidance.
If the shops sell the materials to (Part No. 13; Page No. 167) Al-Rajhy Company and this company holds them and then re-sells them, there is no harm. However, if you take the materials from these shops and Al-Rajhy Company pays the value for you, then it takes it back from you with an increase, this is unlawful because it is a loan with the condition of increase and this is usury. Allah (Exalted be He) says:
...whereas Allâh has permitted trading and forbidden Ribâ (usury).
The Prophet (peace be upon him) said:
Allah has cursed the one who takes usury, the one who gives it, its witnesses and the one who writes it.
May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family, and Companions.