Introduction

Lease or Ijarah is an agreement or arrangement in which the tenant must pay or provide benefits
or the benefits of a substance or object that is owned by the owners of goods lent. Law of the
lease is permissible or allowed. These activities have long been practiced in the community and
it has been around since pre-Islamic times again. In fact, this contract is not something foreign to
today's society. Virtually all individuals involved with it. For those who have a limited ability to
make a purchase of houses and premises, then the alternative is to make way rentals.
Through the contract, they do not need to purchase the assets concerned are likely not in
accordance with their capabilities, but only pay a sum of money to get the benefit of the leased
asset. However, ownership is not transferred to the lessee. The lease should be leased goods,
tenants, lessors, benefits and agreements between the owner of the goods and the hiring of goods.
Tenants in return the goods or assets that are rented must return the goods in their entirety as was
first borrowed without reduced or increased, unless there is another agreement agreed upon or
before the goods change hands.
Understanding Ijarah (Lease)
Ijarah or lease is a type of contract mu'awadah maliah popular among Islamic banks. According
to the terms in Arabic, Ijarah is the word refers to payments given to people who do a job as a
reward for what he did. It is also mentioned as ajr or ujrah. "Ajjarahu" or "aajarahu" means the
reward for the work done. This word is only used to refer to something that is profitable and is
not used for something harmful. Ajr usually used to refer to the reward of the Hereafter, while
ujrah refers to reward of the world.
According to the terms of jurists as stated by the authors of Mughni al-Muhtaj Ijarah is a contract
for services (benefits) which can be paid and allowed to certain items. The purpose of
contracting a service (benefit) is transferring ownership of service (benefit). It was stated by
some definition as the transfer of ownership of a service (benefit) and paid with goods.
Thus, ijarah is defined as a contract between two parties, the lessor and lessee. The lessee here
can enjoy the asset own by the lessor. Therefore, only the benefit of using the asset is guaranteed

but not the asset but not the asset. In this contract the offer comes from the owner and be
accepted by the lessee.
Ijarah can be define as the sale of usufruct in which it does not involve the sale of tangible assets
but rather the sale of intangible assets (usufruct). The lessee holds the right (haqq) only to the
extent of utilizing the property without any right of selling it. The basis of ijarah is comes from
the al-Quran, al-Sunnah and Ijma al-Ulamak.

Said one of them O my father engage him on wages. (Al-Qasas 28:26)

If you had wished, surely you could have exacted some recompense for it. (Al-Kahf 18:77)
Types of Ijarah and its Conditions
The lease is divided into two parts. Some part of the lease is the first a lease of benefit and the
second is that the rent wage work. Each part of the tenancy has its own conditions.
FIRST: Rental Benefits
What is a lease rent benefit is the benefit of goods or assets. For example: Mr. Majid rent his
house to Mr Ibrahim with the payment of RM 550 per month for a period of 1 year. This lease
have not disagreed among scholars on its necessity, rental payments can be made at the
beginning of the contract or monthly basis.
Conditions Rental Benefits
Among the conditions of the lease benefits are: 1. Services must have a value.
The services received and required according to syarak legislation and normally practices, so it
can be paid with the fee accordingly. For example, rent house to live in, or vehicle for a ride. If

the service is not valued in accordance with legislation, payment is considered futile and
wasteful. Thus:

Not valid for equipment overpass because its use was banned. Likewise, unauthorized
hired sculptors to carve an inanimate object or hire a female singer to sing to a nonmahram, because all of this is prohibited.

Invalid hires a dog to chase or control because animals are not worth according to Islamic
law and so also with his services.

Invalid hires someone to talk endlessly though doing so may popularize the goods or give
you an advantage. Similarly, the rental of dirham or dinar for decorative purposes.

2. The owner of the service must be able to deliver services that tenants can use it. If the owner is
not able to deliver such services physically or legally, the rentals become illegal rentals. Thus it
will be;

Not valid lease the goods that have been confiscated to the person who does not hold the
goods. While he was unable to take back the product of people holding on it when
contracts is enter.

Not valid lease the land for agricultural purposes which no permanent sources of water,
while rain, snow and something like that cannot meet irrigated.

Illegal hiring of women in menstruation or childbirth to serve in the mosque. This is

because these services require this lady hovering in the mosque, while the act is not
allowed even if he can assure cleanliness. The reason is, this legislation only allows
women to cross alone but must never be or linger therein. By this means the service of
this woman cannot be presented in terms of syarak legislation.

3. Services offered by the employer, not by people who are hired.

Invalid hire someone to do worship that requires intent and cannot be delegated to others such as
prayer and fasting. This is because in this case, the service (benefit) here will be reward to the
person who hired. The reason, the purpose of worship is to test the obedience and submission of
the human soul. This cannot be done by someone other than the perpetrator himself.
Nevertheless hire someone to do worship that can be represented is valid even worship requires

intent. With this, hire someone to perform Hajj on behalf of people who are unable or have died
is valid. It is similar with fasting on behalf of people who have already died. Including korban,
pilgrimage slaughter and distribute zakat. This is because all worship is allowed by Islamic law
to be made by a representative on behalf of responsible person. Likewise, teach the whole or part
of the Al-Quran. This is because basically learning shall be borne by the student or by those who
bear his expenses
4. Services (benefits) are rent without intended to get the goods.
It is voidable to rent a garden to get the fruit. Not valid for hire a goat for its wool, milk and
others. This is because, in essence, lease contract is to own services (benefit). Therefore leases
cannot be done with the aim of getting goods. In addition, act like this actually refers to the use
of goods directly, instead of using the services of these products. Rent context is the use of the
service, not the consumption of goods. If leases involve the use of goods on the side and not be
the goal of the contract, it is allowed. For example, when a person hires a woman as infants or as
caregivers and infants only, this contract itself involves the use of milk suck being an item. This
act authorized for emergency or intent necessary.
God's Word s.w.t:

"If they suckle for you, give them their recompense". (At-Talaq: 6)
5. The services must be understandable by parties in terms of goods, the nature and quantum.
Legal requirements of a lease contract are: i. Information about goods services. This information involves knowledge about the
position of the goods. Therefore invalid leasing one of the two houses without determined which
one. This is because of the asset is not known due to his position is not known. Similarly, if the
owner said "I rented a house to you. Without nature or otherwise referred to a particular house.
This is because the service is the lifeblood of the rental contract. Therefore it should be clearly
stated to validate the contract. Because the service is something that is not shaped objects that

can be transformed or determined, details can be replaced with information about the position of
the goods. With this, information on the status of goods acquires information about the service.
ii. Information on the type and nature of service (benefit). This is necessary for goods which
have different useful lives according to the user and its use cannot be compromised.
iii. Information on service rate. Service rates vary according to the type of service. There were
evaluated by use of time. There were evaluated based on the work done. There were evaluated by
both the previous point.
SECOND: Wage of Work
What is meant by wage of work is sublet benefits and personal skills. In the context of Ijarah,
what made al-ma'qud alaihi ( ) is the work itself which as a reciprocal work and
expertise in the work, he paid a certain wage, such as hiring a maid, cobblers, tailors, consultants,
lawyers, staff and other companies.
Wages Working Conditions
Payment of wages should follow the same conditions as the payment terms in the contract of sale
and purchase. This is because these payments are payments for services actually want owned
through rental contract. Among the conditions that have been set wage of work are: 1. The rental fee must be from the good sources and clean.
The rental contract is not valid if the rental payments or wages are a pig or a dog that has not
been tanned skin or alcohol because all this stuff is unclean and haram. According to Sahih alBukhari and Sahih Muslim, Rasulullah SAW prohibits payment in the form of a dog. According
to the hnarrated of al-Bukhari and Muslim, the Prophet said, "Allah and Prophet forbid the
purchase of wine, carcass, pig and berhala". Similarly, the products affected are unclean and
cannot be cleaned, such as vinegar, milk, oil, liquid, cooking oil and ghee. This is because the
Prophet had ordered liquid oil were throwing if exposed to feces.
Ibn Hibbaan narrated from Abu Hurairah, means: Rasulullah SAW was asked about a rat who
fell into the oil and die? He said: "If it is frozen, throw it and it surrounding and eat. If it melts,
do not close to him." In another narration mentioned: "You throw."

Because of these products are not authorized for sale as unclean, it is also used as an
unauthorized payment of wages and rents. This law was Qias to all goods those get dirty.
2. Rental payments can be utilized.
Invalid provide rental or fees shaped something that cannot be utilized as worthless as an insect
or two of wheat, or as dangerous as wild animals, or as banned by legislation as a means of
amusement, berhala and sculptures. This is because these products are not helpful and cannot be
evaluated by the property. Therefore, it is not valid for use in exchange for receiving something
else. Services that fill the rental contract are something a treasure worth. Therefore, it cannot be
paid with something that is not recognized as assets.
3. Capable to be handed.
Not valid rental or fees in the form of a bird that is still up in the air or the fish are still in the
river. Not valid even if it be a booty unless it is given to the person holding the goods or the
person who is able to retrieve it.
4. The contracting parties have the power (region) to deliver it.
Power (region) here means either as owner or as a representative. If payment of rent or wages is
beyond the power of the contracting parties, the contract is entirely invalid.
5. Payment hire or reward known by both parties.
Not valid if the rent is paid by the home repair needs. Not valid if the car rental is paid with oil.
Invalid hire an animal if the paid by giving the food only because the rate of rent payments
cannot be ascertained. Included in the sense that the rate of payment of rent or wages is not sure
is part of the wages earned from the work of people who are hired. For example, wages paid to
slaughter a goat and skinning with skin or some members of the goat. This is because the
thickness of the skin and goat membership rate is unknown.
Reasons for Lease Transactions Akad Will be Void according by Scholar Shafi'i
The rental contract is a contract or transaction that must be observed by both parties. That is,
after the contract or transaction is approved, the owner and the tenant, or employer and a hired

worker may not cancel the contract or transaction is just that at any time they wish. Contract or
transaction can only be canceled for a reason. When canceled, the contract or transaction is
considered terminated. The reason Cancels Lease Transactions According to Shafi'i Scholar
Among the reasons that can cause an irrevocable Lease Transactions or ending in the opinion
Shafi'i Scholar are: 1. Goods rented were damaged.
If the tenant renting a house or a car and then the house is destroyed or damaged the car before it
is used, the contract is void. This is because the service item that is the subject rental can no
longer be used. In addition to damages, including subtitles in this is that if goods are defective so
as not to be used for the purpose intended. If damage or defects occurring after most engaged the
contract is void start of the damage happened and so on. The owner is entitled to obtain payment
of rent for the service that has been used as part of the total rental fee agreed upon. If the lease is
a lease guarantee. For example, a tenant renting a car attributes specified in the assurance that he
sent to the owner of a place, and the car was brought to the tenant but was later damaged or
defective, the contract is void. Instead car owners need to replace it with another, whether the
damage occurred before or after the service is used. This is because the service promised was not
spared only because the car provided it is damaged, because the contract does not refer to a
specific car, instead referring to the car specified with certain characteristics and can be replaced.
As stated previously leased goods, as well as hirelings. When the employer to hire a specific
person to do a job, then hired people dead or illness from which he can not do the work, the
rental contract is void. If the lease is in the form of a guarantee, then the person hired someone to
come take work, then this person is dead or ill, the contract is void because the service is not
available through other people.
2. Goods not delivered rental on time.
For leases involving the rental of goods and services are set only for a certain period, when this
period expires and the owner still does not deliver the goods leased fixed, the contract is void.
This is because the goods can not be delivered on time. The same law applies to leases warranty,
if the owner fails to deliver the agreed services on time. However, if no time is specified to
deliver the service owner and the action does not set the deadline will not affect the original

purpose of the tenants, while the owners were just handed the service after the service time can
be used has passed, the contract is void because the contract is akin to debt late fulfilled. If the
owner of the goods delivered or brought after the expiration of the rented part of the rental
period. Contract for the period prior to the submission considered void. While the rest is up to
the tenant to make a choice. If the service offered is determined by labor and goods to be used
later submitted to enable the work was completed, the contract is not void because the contract
involves only non-time service. Therefore there is no reason for it not to finish up the contract
should be canceled.
Modus Operandi Of Ijarah
Structure Of An Operating Lease:

Purchase Asset

LESSOR

SUPPLIER
Delivery

Ijarah Agreement

Delivery of the leased asset

LESSEE
1)
2)
3)
4)
5)
6)

Customer pays the dealer deposit

Customer applies for financing
Financier pays dealer full price of the asset and thereafter becomes the owner.
Financier leases the asset to the customer at an agreed rental rate for a specified period.
Asset is delivered to customer
At the end of the lease, bank sells the asset to the customer

So what happens under Operating Lease?

1) The Bank will always own the Asset. No transfer of ownership will be made.
2) As owners of the Asset, it is the responsibility of the Bank to incur expenses and upkeep
the Asset.
3) The Bank must always monitor the market value of its Assets. We might not have the
right expertise for this, and may need to outsource this function.
4) Even after the completion of the primary lease period i.e. all payments has been made
according to schedule, the Bank must continue to manage and monitor the Assets by
extending the leasing arrangement into a secondary lease (which earn very little).
5) To have this monitoring capability, full time employees need to be hired to manage the
portfolio.
6) The inherent risks for Operating Lease must be seriously looked into by the Bank. The
risk of loss of Asset, devaluation of Asset value and maintenance of Assets must be
internally catered for.
7) The costs of setting up a unit to manage the Asset may not be cost effective.
8) The way the risks are mitigated. Credit approvals must take into account the various risks
offered by the product and take into account the risk appetite of the Shareholders. In
short, the Shareholders did not provide funds for the purpose of making in a high risk
use of their funds. Their mandate is simple; safe, reliable investments and use of Asset.
9) The stamp-duty for an Asset ownership structure is more expensive than the stamp-duty
of a financing structure.
Ijarah Thumma Al-Bay (AITAB)