Commercial Property Lease for impermissible activities
Question:
Good day, I trust you are well. I run a property company that owns both residential and commercial property. We do both the investment as well as management of said property portfolio. We are unsure on whether it is shariah compliant to acquire a commercial property whereby a small portion of rental would be coming from the sale of alcohol. An example would be should we acquire a large mall. Whilst most of the income would be from the usual tenant mix, a portion of an anchor tenant, say PickNPay's rental would be from a PickNPay liquor. This question stems from us being told by various people that a small portion is allowable and furthermore, we have seen other muslim owned companies acquire such property. Our questions are: 1) Are we allowed to acquire such a property? 2) If yes, what is the allowable percentage for alcohol sales? 3) If no, are we then also not allowed to have tenants that sell unhalaal meats in their shops? If you have any queries, I am happy to clarify over an online meeting or a call. Kind regards, Taa
Answer:
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
A rental agreement is referred to as “Ijarah” in Shariah and hence all the rules and laws of Ijarah will be applicable. There are different forms of Ijarah including Ijarah al-A’maal, Mushtarakah and Ijarah al’Manafie. There are several parties in an Ijarah including the Mujeer/Lessor, Musta’jir/lessee and the Ujrah/rental fee. There are a number of considerations in reviewing a Shariah Compliant financial solution including a thorough review of the underlying financial mechanism/construct, the terms and conditions and the supervision and monitoring of the agreement to ensure continual shariah compliance.
With regards to your specific query, you state that you run a property company and wish to enquire whether you can lease commercial property assets to a liquor store.
According to Imam Abu Haneefah (Rahmatullahi Alayhi), it is permissible for a one to rent one’s property to a non-Muslim for the purposes of running a church, synagogue or even selling wine. Imam Abu Haneefah (Rahmatullahi Alayhi)’s viewpoint is based on the premise that one is merely renting out the usufruct of one’s asset/equity to a non-Muslim. One is neither responsible nor accountable for the unlawful actions of a non-Muslim.
However, according to Imam Muhammed (Rahmatullahi Alayhi), Imam Abu Yusuf (Rahmatullahi Alayhi) and the other three A’immah (Leading Religious Scholars), it is not permissible for the lessor to rent out his property for such purposes. (Durr al-Muktar, 6, 392, Jawahir al –Fiqh, 7, 509)
The first view of Imam Abu Haneefah (Rahmatullahi Alayhi) is Awsa’ (more accommodative) while the view of Sahibayn, Imam Muhammad and Imam Abu Yusuf (RahimahumaAllah) is more Awra’ (more conscientious).
The main issue of discussion is I’anah alal Ma’siyah (assisting in sin). The Fuqaha have differed regarding the classification of “Assisting in Sin”.
The ideal ruling would be that one does not rent out one’s property for such purposes. If one has Taqwa, strong Eemaan and sincere courage, one should abstain from such a rental arrangement.
Allah (Subhanahu Wa Ta’ala) says:
“And do not assist one another in sin” (Qur’an 5:2)
If one is in financial constraints and would experience difficulty by terminating the rent agreement with such a client, then one will be excused to continue renting out the property.
In any event, and according to the above explanation, the rental income received from such clients will be permitted. However Taqawa will demand that such income be dispensed off in charity or potentially the rental income could be swapped for higher maintenance charges in such an event. In such a scenario, you could recover your maintenance costs while not directly charging a rental fee to such a tenant.
You are welcome to contact us at the Darul Iftaa for further guidance on structuring a shariah compliant rental agreement. You can read more on Ijarah/Islamic leasing by downloading our book “Your Brief Guide to Islamic Finance” from www.shariahbusiness.com.
and Allah Ta'ala Knows Best
(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee
Darul Iftaa, Durban, South Africa
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