A type of ijarah which involves the sale of a clearly specified underlying asset, which is currently being produced or constructed, for a future delivery. With ijarah mawsufa fi al-dhimmah (also called forward ijarah), a financier undertakes payment during the construction period, whilst customer’s payments will start within a specific period after completion. Although forward sales are impermissible under shari’a law, forward contracting through ijarah is permissible provided that the rent amount will be paid only after delivery of the underlying asset. For example, an ijarah mawsufa fi al-dhimmah can entertain individuals/ firms’ needs to buy a property to be delivered in the future (such as a home, office, or plant).

The rental must be known at the contract date. The rental rate must be preset for the whole tenor of ijarah. However, it is possible and permissible, in consideration to volatile market conditions, to apply a floating rate that changes from period to period. In such a case, the ijarah tenor can be divided into shorter intervals or phases for each of which a specific rate is applied based on the agreement of both parties at the time of affecting the ijarah contract. Likewise, the parties may enter into a short-term ijarah contract that is renewable at future dates, where future changes in market conditions may be accounted for.