Subject : Wants to Lend him Money against Renting his House to him

Fatwa Number : 1948

Date : 22-11-2011

Classified : Leasing

Fatwa Type : Search Fatawaa

Question :

A new method of renting has emerged where the house owner rents out his house for two years in return for a total amount that is double the monthly rent and receives the whole sum upon signing the contract. At the end of the two years, he gives that amount back to the tenant without any addition or deduction provided that the house is in the same condition it was handed two years ago. Moreover, the tenant has no right to re-rent the house. What is the ruling of Sharia on this contract? If it is invalid, then how can it be amended?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

 

Ijarah is "to give something on rent" or "providing service for a wage." Since the house owner will give back the rent then this isn`t considered Ijarah. Rather, this is a loan and the Sharia maxim, in this regard, states: "Every loan that attracts a benefit/advantage is Riba (Usury)." Moreover, as the loan giver (Tenant) will receive a benefit, which is living in the house for two years, then this is a prohibited usurious contract, which is impermissible to deal with.

In order to amend this contract, the house owner must rent it out against a specific sum for a year or two, the tenant must possess the benefit of the house and the owner must possess the rent. And Allah the Almighty Knows Best.

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