Buying property with installments + service charge

Investment Questions and Chats Property
#1

Assalamu Alaikum
Dear Mufti,

I hope you are doing well.

I am having huge confusion regarding a (kind of) a mortgage plan I am involved in.

In Turkey, there is a financial institution that claims that they help people to own properties without interests. And, they have helped hundreds of people to own properties. But interestingly, they ask for a huge amount of ’service charge’. Will it be halal?

For example, I myself took a package from them. I wanted to purchase a house worth 200,000 lira. Their plan was like this:

  1. At first, I will pay them 2000 lira every month for two years.

So, by 24 months, I will have given them 24,000 lira.

Then, they will directly allow me to purchase a property worth 200,000 from anywhere in Turkey. They will buy it for me.

They will register the property with my name but with a condition that I cannot sell it until I payback the rest of the money (176,000 lira) to them.

Then, I keep paying them installments for years until it ends. And, I exactly pay them 176,000 lira. I don’t pay more or less.

But my concern is: they take a ’service charge’ of 15,000 lira. If I had chosen to purchase a property worth 400,000, then I should have paid them 30,000 lira as ’service charge’. The more the price of the property is, the more ’service charge’ I pay.

They named it ‘service charge’. But ultimately, they are taking extra money from me. The interesting part is: there is no fixed service charge. The more the price of the property is, the more service charge I pay.

Will it be halal to work with them/ buy property with their help?

Jazakumullah khayran for your kind cooperation. I would appreciate if you could answer with references.

May Allah bless you immensely.
Kind regards

#2

Wasalam

May Allah bless you.
If a fee truly represents the value of a service offered, then it will be permissible for the company to charge this fee and for a customer to pay.
However, there are companies that charge a service fee as a backdoor for charging interest.
I do not have much details to say what is the case with this financial institution. But, I would advice to speak to them and ask them if they are certified by a scholar. If you are in Turkey, it would be worth to also speak to a local scholar about it.

And Allah knows best!

#3

Jazakumullah khayran dear Mufti.
I really appreciate your time and efforts to help us.

Yes, they have a service charge which increases or decreases according to the price of the house I want to purchase . For example, if I want a house worth 200,000 lira, the service charge is 15,000 lira. And, I want a house worth 400,000 lira, the service charge is around 28,000 lira. They even give the percentage of the service charge. They frankly say: The service charge is between 5% to 10%, depending on the price of house.

I am now regretful, to be honest. Because I could not catch this trick. Why would they charge a higher service fee with a higher priced house? Probably, government taxes are more with more money. I have no idea.

Khayr inshaAllah.

I asked a local scholar. He said: I cannot say this haram, and I cannot say this halal. But my heart is not mutmain with this programme.

Khayr inshaAllah.

I thank you again for your reply.

Thank you