How ICFAL SER property finance works?

Basically SER stands for Share Equity Rental. It is a partnership between ICFA and the applicant member to co-own a property on shared equity basis. In Islamic term it is called Musharaka. Member contributes a minimum 20% of the property value at the time of purchase and ICFA contributes the rest, but maximum $A250k. Legitimate costs of initial purchase are shared. Intention of the parties is that the member purchases ICFA’s share over a term period and become the full owner at the end. Maximum term is 15 years. A negotiated profit is preset for each sale of ICFA share which normally occurs monthly. Member may be entitled to purchase additional shares at preset “Equity Sell Price” shown in the contract. During the co-ownership, both parties share the cost of ownerships such as council fees, fixed service fees and strata fees. As the member is intended to be the final owner, the property title document is registered in the member’s name. In return and to give a security, member mortgages the property to ICFA.

Objective of ICFA is to help members acquire property for living in halal way therefore, it is for that reason, the SER is prioritised for those members who are the first home buyer and who intend to live in the property. Member then pays a rental for living as a tenant. The rental, which reasonably represents the market and negotiated based on location, size and condition of the property and the term etc., is preset and is shared as per the equity of the owners. But in unavoidable circumstances, reasonably time after the SER contract, when co-owner cum tenant has to move out of the property for job or other valid reasons, the member can rent it out to a third party with special consent and pre-agreement of ICFA.

In complying with the Islamic Sharia and rules of the co-operative in accordance with the Co-operative Act 1992, both parties will sign financial accommodation contract and Sharia compliance documents. A typical financial schedule is shown below. Note actual values can be different than below as they are dependent negotiated profit, rental and terms.

In application processing, member must wait for at least 6 months after becoming member. When there is shortage of funds, normally applications are processed on the “first come first serve” basis for only valid applications. Further factors such as length of membership, type of investment, social and legal factors are also considered at the discretion of the board of directors for the best outcome for the co-operative and member. Both parties engage independent lawyers for contract matter. Member must bring his/her part of property share to ICFA account as soon as finance is approved but not later than one month prior to the settlement date. This money does not earn any dividend for the period it is held inactive.

For further details and conditions please contact us.