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  • Is Rental Income Halal?

    Posted by ودود on January 9, 2021 at 9:18 pm

    Is it halal to rent a car when the owner is not using it? Anything surplus to our needs is supposed to be spent any way so how earning rent on such a thing is justified?

    Is it halal to lease to own a car where the buyer pays cost of the car plus rent over a period of time? Here the seller is expecting the buyer not only to “create” money to repay the cost but also to “create” additional money to pay the rent.

    ودود replied 3 years, 1 month ago 3 Members · 19 Replies
  • 19 Replies
  • Is Rental Income Halal?

    ودود updated 3 years, 1 month ago 3 Members · 19 Replies
  • Faisal Haroon

    Moderator January 9, 2021 at 10:18 pm

    Renting out a car is perfectly fine. There’s no requirement to spend all surplus income. When a pressing need of the society presents itself and we have money to spare in addition to our present and reasonable future needs then we’re required to not hold it back. Other than that earning money through any moral means have no restrictions in Islam.

    There’s also no restriction on lease to own transactions. This kind of a setup is materially very similar to mortgage. Ghamidi sahab has explained mortgage in a lot of detail in the following videos:

    Discussion 30863

  • ودود

    Member January 10, 2021 at 5:50 am

    1. Al-Maun – الماعُون seems to expect believers to share their stuff with others for free. What is the evidence from Quran or Sunnah that rent is halal?

    2. The evil of riba, as sir Ghamidi has described in his videos on Riba, is also found in a rent transaction. For example, (a) it being a surplus resource is supposed to be shared with the needy any way so how can one ask for a mark up or (b) asking for a mark up is going to cause too much of hardship to the borrower as he has to “create” something to repay you.

    Please can any one help me understand the above points?

  • Faisal Haroon

    Moderator January 10, 2021 at 11:28 am

    Quran chapter 107 (Al-Maun) is about a person who denies the truth and the day of judgement as evident from verse 1. This chapter personifies Abu Lahab who was the head of the treasury of the house of God. It has nothing about giving everything out for free.

    Riba is just one application of the principle injunction of not unjustly devouring other people’s wealth (Quran 4:29). There can be many other such applications and they all will stand haram.

    The concept of hardship in recreating wealth is only applicable in transactions involving consumable items. Once such an item is consumed (e.g. money or grain), that item itself must be recreated in addition to whatever additional amount (riba) must be paid back. When a person has to recreate wealth in such a manner, he has to borrow more. This creates a viscous cycle that’s extremely hard, and sometimes even impossible to get out of.

    When the underlying item is a non-consumable, it can be returned at any time with a reasonable usage fee (rent). Rental transactions always take place when the underlying item is a non-consumable, and there’s nothing inherently wrong with it. Of course, even in such transactions one should be mindful of the principle of justice.

  • ودود

    Member January 10, 2021 at 5:47 pm

    Ask Ghamidi

    Al-Maun – الماعُون

    سو بربادی ہے (حرم کے پروہت) اِن نمازیوں [3] کے لیےجو اپنی نمازوں کی حقیقت سے غافل ہیں۔یہ جو (عبادت کی) نمایش کرتےاور برتنے کی کوئی ادنیٰ چیز بھی کسی کو دینے کے لیے تیار نہیں [4] ہوتے۔

    I was referring to the above para of the chapter A-Maun.

    As you can see the last line clearly expecting us to share things with each other for use.

    2. It’s not true that hardship of recreation is applicable only when consumables are given as loan. Consider this scenario, i am a getting a car under leaser to own arrangement for $25k. Of which $20k is the cost of the car and $5k is the rent. I have to create the whole amount $25k to repay the lease.

    In another scenario, a friend of mine lends me $20k and ask me to repay him $20k+$5k interest over the same period of time as in case of the lease above.

    Please can you explain how the above two scenarios are different in a way that one is fair and other is a tyranny or Zulm?

    To my mind both transactions are the same in substance while the form maybe different. Substance always prevails over form and therefore you cannot say one is haram and other is halal. Either both are haram or both are halal.

    Please share you views and logic thanks

  • Faisal Haroon

    Moderator January 10, 2021 at 6:33 pm

    The explanation for non-consumables was shared in my previous response. It can be returned at anytime.

    As for Quran chapter 107, please read the verses you shared above in the of context previous verses.

  • ودود

    Member January 10, 2021 at 7:32 pm

    I asked this question after listening all the video and reading Mazan. However i didnt get my answer.

    Need help to understand it better.

    2. The context does not seems to add anything to the meaning. Allah is clearly saying who do not share their stuff for use are ruined. What is there in the context that is changing it — will appreciate if you can explain. You may tag some scholars to answer my questions if needed. Thanks

  • Faisal Haroon

    Moderator January 10, 2021 at 8:43 pm

    You’re focusing on one part of Chapter 107 disregarding the entire context. I have explained the context above. Here I’m reproducing the translation of the entire chapter. I encourage you to also read the notes in Al-Bayan. In this chapter an entire personality and behavior is being criticized – not a restriction being placed on renting things out.

    Quran 107:1-7

    Translation by Javed Ahmed Ghamidi / Dr. Shehzad Saleem

    Have you seen the person who denies the Day of Judgement? He it is who shoves the orphan. And urges not the feeding of the poor. So devastation be to these [priests of the Baytullah]. Who pray being unmindful [to the essence] of their prayers. Who put up a pretentious display [of worship]. And are not even prepared to lend ordinary items of common use to others.

  • ودود

    Member January 11, 2021 at 12:45 am

    The context tells us that bad guys “are not even prepared to lend ordinary items of common use to others”. In other words, we should lend and share things with others in order to become good guys, right?

    However, it does not necessarily mean that renting is forbidden because if we take that meaning it will also make trade haram which is against other verses of Quran.

    Based on the above we can say rent is not forbidden and therefore lending money with a charge for credit service is also not forbidden as both are the same transaction in substance and only terminology or form is different.

    Now the question is what is riba and why it is forbidden? Is riba actually usury (an exorbitant rate charged when borrower is helpless under force of necessity) and not interest (a charge for credit service at fair market price) ?

    If one insists that usury and interest both are haram then he has to identify (1) a unique evil in interest, which does not exist in renting, regardless of terminology.

    Sir Ghamidi videos and Mezan do not address this point. Dr Shahzad Saleem’s clip on usury and interest also does not explain why he believes both are the same. (i.e rational or reference from Quran or sunnah is missing)

    A dictionary definition of riba or usury also contradicts with the view that interest and usury are the same. Usury is a one way flow of money without any reciprocity whereas interest is a two way transaction i e a fee for credit service.

    Please raise this issue with Hassan and ask him to cover in the next video on 23 responses unless someone can explain it here.

  • Faisal Haroon

    Moderator January 11, 2021 at 2:06 am

    Ghamidi sahab has explained many times over in his books and videos that riba is when a demand is made for an additional amount in lending a consumable item such as money and grain. This is prohibited because the borrower has no means to reproduce the consumable once it has been consumed. I concisely explained the same to you above, and also shared the videos of Ghamidi sahab where he explains these concepts in a lot of detail. I encourage you to watch those videos again. If you’re still not satisfied, please feel free to register for the next Ask Ghamidi Live event, and hopefully you’ll have chance to pose your question to Ghamidi sahab directly.

  • ودود

    Member January 11, 2021 at 4:52 am

    Discussion 40481 • Reply 40518

    Please try to understand my question first. I have given you two scenarios in my above post. Both scenarios require “reproducing” money to repay and both the scenarios have the evil of surplus resources being used for making money — but according to the videos and Mezan one is halal and other is not. Tell me where I am wrong in understanding the concepts thru videos or Mezan.

    The objective of raising the issue in this forum to find out if my question is valid and if so i can have a detailed discussion with the likes of Hassan Ilyas, Manzoor ul Hassan or Amir Gazdar first. They are the ones who can the discuss it with sir Ghamidi in a scholarly manner if needed. There is no point in asking sir Ghamidi this question thru A&G forum as i already know his answer thru the videos and Mezan but those answers do not make sense to me.

  • Umer

    Moderator January 11, 2021 at 10:36 pm

    Quran’s Chapter 107 Verse 7 is an ethical attitude expected from God-fearing Muslims but is in no way a law in itself. The law in these matters only relate to ‘لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ and of which riba is one of them. For example, in your first scenario, there is car that exists physically and can be returned to or taken back anytime, thus securing the principal and buyer has to only pay back for the principal amount for the car and rent for using that car until the period he materializes the ownership of the car. In case buyer fails to pay back, the car can be returned and seller is secure as far as a significant potion of his risk is involved and buyer will not be imposed with extra burden of recreating the principal (since car already exists). Hence, لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ doesn’t apply here.

    You can compare this with your second scenario and I think you will be able to appreciate the difference between two situations and why one is categorized as لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ and other is not.

  • Umer

    Moderator January 11, 2021 at 11:18 pm

    For comments of Ghamidi Sahab on Quran’s Chapter 107 Verse 7, please refer to the video below from 9:17 to 10:16

  • ودود

    Member January 12, 2021 at 1:26 am

    1. The interpretation of 107:07 is clear now and i agree that it does not make rent haram.

    2. Are you saying if loan is secured by an asset, charging a mark up is ok but if loan is not secured we can not ask for a mark up as it falls under eating others wealth unfairly? If i borrow a $10k for my education and agree to return $11k after my graduation it is going to be like the lender is “eating up my wealth” but spending the same amount on buying a computer would magically make the $1000 extra halal earning for the lender? Just because principal sum is somewhat secured by the asset? The principal amount is payable back to the lender no matter i have the computer or not, right? Let’s not worry about the principal sum we just need to focus on the markup part which becomes ‘legal’ if we call it rent and ‘illegal’ when we call it interest in the same transaction. What is the science here?

    • Umer

      Moderator January 12, 2021 at 2:39 am

      I borrow a computer, use it and return it in ‘as-is’ form and pay for its usage which is called rent.

      I borrow cash, buy computer from it, but now I cannot return computer back in ‘as-is’ form, either I’ll be forced to sell that computer to generate cash (which would generate lower cash as compared to its initial market value) or I would have to generate enough cash equaling the cash I borrowed plus the rent on that cash that I just consumed (which is called riba).

      Do you see the problem in second scenario?

  • ودود

    Member January 12, 2021 at 3:02 am

    What if the loan is lease to own agreement or the lender agrees to buy back computer at original cost? Is it going go make the markup halal? Actually your reasoning is whether the principal sum or investment is secured or not. This is not what i am discussing. It is secured or not or whether there is high chances of default or whether lender will be able to recover it or not is not something that falls under “riba”. We are discuss just the additional $1000. Tell me what is difference between interest and rent if the money borrowed was spent on buying a computer no matter how this transactions was documented the rights and obligation of the parties remain the same under both scenarios. Dont see why one of them is halal and other is not. There is fundamental problem in understanding the difference between riba and trade. This is causing the confusion here.

    • Umer

      Moderator January 12, 2021 at 5:04 am

      I think It is this first phase of transaction which identifies whether resulting earning would be rent or riba, therefore it cannot be ignored. If it arises through a profit earned through loan transaction, it is riba (a well known definition), and if it arises through a profit earned through trading, then it is either rent income or normal trading profit. What distinguishes riba from rent is the presence/absence of a loan arrangement and loan is always in some form of consumable items.

  • ودود

    Member January 12, 2021 at 6:03 am

    How can mere presence of loan make something “eating other wealth unfairly”?

    I buy a computer under hire purchase for $10k whereas the cash price is $8k. A friend of mine lends me $8k to buy the computer and payback $9k over the same period of time as under the hire purchase agreement.

    Who is “eating my wealth unfairly” here — the hire purchase vendor who is charging me $2k mark up or my friend who is charging me $1k only for his credit service?

    • Umer

      Moderator January 12, 2021 at 8:00 am

      Hire-Purchase relates to application of basic principles of Riba where two people may disagree on application. So as long as we are clear on general difference between Riba and Rent, the application can be understood w.r.t how one thinks that one particular application has Riba element in it or not; this is not redefining Riba, rather it is applying that definition to one practical newly-created financial transaction scenario.

      Now, according to Ghamidi Sahab, as I’ve understood, this hire-purchase scenario where I purchased a computer, the consumable factor has been eliminated while it is not the case in case of a cash-based loan arrangement. Therefore, from Riba perspective, the potential of ‘eating wealth through unfair means’ has been eliminated through hire-purchase, because of introduction of a useable product in the equation. There could be other factors that may make this arrangement unfair and for that other things need to be considered in the context of لَا تَأْكُلُوا أَمْوَالَكُمْ بَيْنَكُمْ بِالْبَاطِلِ , but as far as exploitation under Riba is concerned, that is covered. Because the seller owns the Computer until I pay back the complete Principal, and I have not been put through double struggle of both recreating the Principal cash and amount over and above that amount as Riba. In case I fail to pay back, the computer simply goes back to the seller.

  • ودود

    Member January 12, 2021 at 11:48 am

    We are going in circles – lets close this.

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