Ijarah is a financial contract that involves the transfer of the right to the usufruct (manfa’ah) or benefit of a property/ asset in return for a specified consideration (ujrah or ajr), usually for a specified duration. Ijarah is permissible based on multiple sources: Qur’an, sunnah, ijma’a (scholarly consensus), and common sense.

In practice, ijarah can be used in various contexts and settings, including ordinary ijarah, ijarah sukuk, and securitization:

• Ordinary ijarah: lease of plant and equipment, real estate, durable goods, etc.
• Ijarah sukuk: these are certificates of equal value issued by the owner of a leased property/ asset with the aim of selling it and recovering its value so that the sukuk holders become owners of the underlying property/ assets.
• Securitization: by definition, it is the process of dividing ownership of tangible assets, usufructs or both into standard units, i.e., units of equal value, and then issuing securities with face values equal to these units. As ijarah involves the ownership of usufructs (manafe’e), it can be put into use in the business of issuing certificates of ownership of usufructs of leased properties. This usually aims to lease properties and receive rental from the revenue of subscription to the effect that the usufruct of the properties is passed into the ownership of the sukuk (certificates) holders.