A type of lease/ leasing that is compliant with shari’ah. It is a contract (aqd) of a designated usufruct (manfa’ah) of a specified property/ asset/ labor or effort for a specified time against the payment of a specified return or consideration. This contract constitutes the transfer of usufruct for a preset, agreed-upon consideration, which is ujrah, i.e., rent in the case of hiring assets or items, and wage in the case of hiring people. In this respect, the subject matter that gives usufruct comes in two types: property/ assets such as lands, houses, offices, vehicles, equipment, etc, and the services of a specialized professional or vocational practitioner like an engineer, tailor, carpenter, ironsmith, doctor, etc.

Basically, ijarah is similar to the contract of sale (aqd al-ba’i), since both contracts involve the transfer of “value” from one person to another against a consideration (iwadh). The transferor (or seller) of usufruct is known as “lessor”, whilst the transferee (or buyer) is referred to as “lessee”. The major difference between the two contracts, however, is that the latter is always time-bound, i.e., the lease can be terminated at any time as agreed by the two counterparties or by the end of the lease tenor. In contrast, the sale contract implies the ultimate transfer of ownership of the underlying asset as soon as the sale is concluded.