What is Ijarah?

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What is Ijarah?
Ijarah is an Islamic term generally referring to some form of rent or the hiring of services of a particular person. Some classify ijarah as having two types namely “Ijarah al-Ashkhas” and “Ijarah al-Ayan”.

Ijarah al-Ashkhas literally means employing somebody, or hiring the services of another person. In simple cases the one that hires is called a “musta’jir” while the person being hired is called an “ajir”. The money involved or the payment for the services is called “ujrah”. This type of ijarah is basically applied to different forms of employment. A basic example is when a particular person hires a messenger to deliver documents or goods to another person. In this example, the messenger or “ajir” is expecting to be paid for his delivery services rendered to the one who hired him or the “musta’jir”.

The second type of Ijarah refers to the Islamic type of leasing. Ijarah al-Ayan involves properties and assets instead of services rendered by individuals. In this type, the payment for rent or lease is called “ujrah” while the lessee is the “musta’jir” and the lessor is the “mu’jir”. A basic example is asset or property acquisition by certain banks which are then “rented or leased out” to clients and customers. This way, the tenants of a particular property pay the bank, which is the actual owner of the property. But in most cases, some banks offer the tenants the option to buy out the property and pay for it along with the rental fees. And since the bank is the lessor in this case, it is expected to shoulder the expenses related to the properties maintenance, repair, and even insurance. But in some contracts, the lessee may be allowed to shoulder the property maintenance and repair costs in exchange for better or reduced rental packages and dues.

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