Is a Lump Sum Rent-Free Lease Islamically Permissible?

Answered by Mawlana Ilyas Patel

Question

Is it permissible to lease a house under an agreement where the tenant pays a lump sum, occupies the house rent-free for a set period, and the owner returns the amount upon vacating?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. Thank you for your question.

It will only be permissible if the nature and terms of the lump sum agreement between the landlord and tenant are clearly defined as a rental (Ijara) with a refundable security deposit (Amana) and no rental waiver linked to it.

If this is not the case, the tenant’s rent-free stay can be seen as a financial benefit and loan, violating the principle that a loan should not provide any advantage to the lender. Since the tenant is paying money upfront and not paying rent, they are gaining a direct financial benefit.

Lump Sum Treated as Loan, Not Rent or Security Deposit

In other words, the lump sum is effectively functioning as a loan (qard) rather than rent or a security deposit. There is a juristic principle: it is not permissible to derive any benefit from a loan. It has been reported by Ibrahim, in a halted-chain report (mawquf), “Every loan that draws a benefit has no good in it.” [Ibn Abi Shayba, Musannaf Ibn Abi Shayba]

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I pray this helps with your question.
Wassalam,
[Mawlana] Ilyas Patel
Checked and Approved by Shaykh Faraz Rabbani

Mawlana Ilyas Patel has received traditional education in various countries. He started his schooling in the UK and completed his hifz of the Quran in India. After that, he joined an Islamic seminary in the UK, where he studied secular and Aalimiyya sciences. Later, he traveled to Karachi, Pakistan, and other Middle Eastern countries to further his education. Mawlana has served as an Imam in the Republic of Ireland for several years and taught the Quran and other Islamic sciences to both children and adults. He also worked as a teacher and librarian at a local Islamic seminary in the UK for 12 years. Presently, he lives in the UK with his wife and is interested in books and gardening.