Ijarah
Also known as: Ijara, إجارة, Islamic Lease, Ijarah wa Iqtina, Ijarah Muntahia Bittamleek
- contract-type
- lease-based
- glossary
- islamic-finance
Definition
Ijarah (Arabic: إجارة, literally 'to give something on rent') is an Islamic leasing contract in which the lessor (owner) transfers the usufruct of an asset to the lessee for an agreed rental and a specified period. The owner retains ownership throughout the lease term, bearing ownership-related risks. In Islamic finance, Ijarah is a key alternative to conventional interest-bearing loans for asset financing. A common variant — Ijarah Muntahia Bittamleek (lease ending in ownership) — combines a lease with a separate promise to transfer ownership at the end of the term, commonly used for home and equipment finance. It is governed by AAOIFI Shariah Standard No. 9 and is one of the most widely used Islamic contract structures after Murabaha, accounting for approximately 10-15% of global Islamic finance transactions.
Primary Sources & Standards
- ID
- ijarah
- Status
- active
- Version
- 1.0.0
- Effective
- 2025-01-01