Shari’ah Compliancy of property investment and relevant Zakat rules.
Regarding part 2 of my question in Fatwa#: 36437, following is the detail. All figures are examplary, but the shares are real.
We are four friends who wanted to invest. We talked to a real estate agent to find us options. He came up with a portion that is currently under construction. The builder agreed to sell it to us in 4 million.
Each of us (4 friends) invested 1 million to buy that portion with the agreement that each of us will get 20% from the resale profit and the estate agent will take 20% of profit on the services that he provided to us in the following; buying the portion, seeing through all documentation and reselling once the construction is completed.
(Please note that this has not happened yet) Lets say the portion sells for 5 million. We get 1 million profit. Each of us, investors and the agent, will get 200,000 other than what we invested.
1. Is the above transactions Shariah Compliant?
2. If not, what should we do now?
3. Would I (one of the investors) need to pay zakat on this 1 million investment while keeping in view my previous query that I have done this investment to go for a larger flat due to my growing needs?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
You state the agent agreed to sell a portion that is currently under construction. What exactly do you mean by this? Is there an existing building on the land or not? We require a detailed description of the portion in reference.
And Allah Ta’āla Knows Best
Abdullah ibn Mohammed Aijaz
Student Darul Iftaa
Checked and Approved by,
Mufti Ebrahim Desai.
 An Introduction to Islamic Finance: PG.66-67