Praise be to Allaah.

Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) said in al-Sharh al-Mumti’ (6/221): 

The poor man should be given that which will suffice him until the end of the year, because zakaah is repaid every year. If it is said that he should be given it until he becomes independent of means and is no longer described as poor, that is a valid point. The same may also be said of the needy. End quote. 

Based on this view, we may give him enough to buy a house in which he and his family will live or we may give him the cost of the tools of his trade, if he has a skill, or we may give him enough to buy property that he can rent out, and the rent will suffice him, if he does not have a skill or does not know how to engage in trade. So there is nothing wrong with giving him money to buy a house to live in. 

Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) favoured the first view, which is that it is not permissible to give a poor person zakaah with which to buy a house, rather a house may be rented for him with zakaah funds. 

He (may Allaah have mercy on him) was asked about a poor man whose friends wanted to collect zakaah for him to buy a house, and in fact they collected zakaah for him and bought a house for him, knowing that the people who paid zakaah were not thinking of buying a house or anything else, rather their intention was to pay zakaah. 

He replied: 

I do not think that it is permissible to give zakaah to buy a house for a poor person, because buying a house takes a lot of money. If the aim is to meet the needs of the poor person, then a house may be rented for him with zakaah funds. I will give an example of that: a house may be rented for a poor man for ten years at a cost of ten thousand riyals, but if we buy a house for him we will not find anything for less than one hundred thousand or two hundred thousand. So it is not permissible to give him this money and deprive other poor people. We say: It should be rented for the poor person, and if he is still poor when the rental period ends, then we should rent it for him again. As for buying a house for him with zakaah funds, I do not think it is permissible. 

Yes, if one of the scholars has issued a fatwa saying that this is permissible, then this issue is one that is subject to itrihaad. End quote from Fataawa Noor ‘ala al-Darb. 

http://www.ibnothaimeen.com/all/noor/article_2647.shtml 

And Allaah knows best.