What is the ruling on what is called (Khalu), i.e., the sale of benefit, and this issue is related to a tenant renting his house to another person?
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The questioner : What is the ruling of the Shari'ah regarding Khalu?
The Shaykh : How?
The questioner : Regarding the Khalu that a tenant demands to vacate the rented property, what is the ruling of the Shari'ah?
The Shaykh : Yes, this is one of the matters with which Muslims have been afflicted. In my opinion, there is a distinction regarding Khalu; some of it is permissible and some of it is not permissible. If the Khalu is a reality, meaning a property or house that is empty and unoccupied, and as often happens, buildings are erected and not yet inhabited, when they are to be rented, a price is set for two things: the annual rent is such-and-such, and the Khalu is such-and-such. This falls under the category of consuming people's wealth unjustly, because rent does not apply to a place that is not vacated for the tenant. Therefore, taking it in this case is invalid and forbidden. The assumption is that when one sets a rent on a property, he is benefiting from its vacancy and utilizing it. So what does it mean to say "the rent is such-and-such and the vacancy is such-and-such"? This is one of the foreign transactions that have infiltrated the Muslims, which they did not know in the past, just as they did not know dealing with riba (usury or interest), because they knew it was forbidden and avoided it, and they knew, despite it being forbidden, that the consequence of riba is diminishment. Muslims today do not know this reality because they handle their material affairs with the rationality of the disbelieving West. So this Khalu in this specific form—a place, a house, a property, or a shop that was recently built and not yet inhabited, where its owner demands two things: the annual rent and the vacancy fee—this is consuming people's wealth unjustly. And for a reason that I do not think is hidden from those present, the vacancy fee does not include the rent for the property; the rent is a separate thing. In order for this price to move, with or without it, or with more of it, to other people who seek to benefit from that property, it means I do not see any legal justification for anyone to say it is permissible. As for the other vacancy fee that may be permissible legally, it is when a person is occupying a place, whether it is a house or a shop, and a person comes and offers him to vacate that place. Here, the vacancy fee is in its proper place. Naturally, the occupant of the property says, "My brother, if it is a house, I am covered in it, and if it is a shop, I am earning my livelihood from it," and so on. The requester says, "My brother, I know this, but I need it, and I will give you something to satisfy you." They agree on a sum, and he leaves and actually vacates that place. He takes compensation for this actual vacating. This is permissible. However, this permissible case should not be said to be permissible absolutely. It is necessary to imagine that the one vacating is the owner of the property who will vacate it, so he has the right to dispose of it, and he is not a tenant. If he is a tenant, it is not permissible for him to agree with the requester to vacate the property, because he is renting it and is not the owner who is allowed to dispose of the rented property. Except, perhaps, in one case: if when he rented it, he had agreed with the owner that, "I am renting this property from you for this annual or monthly rent, but I have the right to rent it to others." The believers are bound by their conditions. In this case, its ruling is the ruling of the owner; that is, he vacates and takes the price of the vacating. This is the statement regarding the vacancy fee, and this distinction is necessary.
The Shaykh : How?
The questioner : Regarding the Khalu that a tenant demands to vacate the rented property, what is the ruling of the Shari'ah?
The Shaykh : Yes, this is one of the matters with which Muslims have been afflicted. In my opinion, there is a distinction regarding Khalu; some of it is permissible and some of it is not permissible. If the Khalu is a reality, meaning a property or house that is empty and unoccupied, and as often happens, buildings are erected and not yet inhabited, when they are to be rented, a price is set for two things: the annual rent is such-and-such, and the Khalu is such-and-such. This falls under the category of consuming people's wealth unjustly, because rent does not apply to a place that is not vacated for the tenant. Therefore, taking it in this case is invalid and forbidden. The assumption is that when one sets a rent on a property, he is benefiting from its vacancy and utilizing it. So what does it mean to say "the rent is such-and-such and the vacancy is such-and-such"? This is one of the foreign transactions that have infiltrated the Muslims, which they did not know in the past, just as they did not know dealing with riba (usury or interest), because they knew it was forbidden and avoided it, and they knew, despite it being forbidden, that the consequence of riba is diminishment. Muslims today do not know this reality because they handle their material affairs with the rationality of the disbelieving West. So this Khalu in this specific form—a place, a house, a property, or a shop that was recently built and not yet inhabited, where its owner demands two things: the annual rent and the vacancy fee—this is consuming people's wealth unjustly. And for a reason that I do not think is hidden from those present, the vacancy fee does not include the rent for the property; the rent is a separate thing. In order for this price to move, with or without it, or with more of it, to other people who seek to benefit from that property, it means I do not see any legal justification for anyone to say it is permissible. As for the other vacancy fee that may be permissible legally, it is when a person is occupying a place, whether it is a house or a shop, and a person comes and offers him to vacate that place. Here, the vacancy fee is in its proper place. Naturally, the occupant of the property says, "My brother, if it is a house, I am covered in it, and if it is a shop, I am earning my livelihood from it," and so on. The requester says, "My brother, I know this, but I need it, and I will give you something to satisfy you." They agree on a sum, and he leaves and actually vacates that place. He takes compensation for this actual vacating. This is permissible. However, this permissible case should not be said to be permissible absolutely. It is necessary to imagine that the one vacating is the owner of the property who will vacate it, so he has the right to dispose of it, and he is not a tenant. If he is a tenant, it is not permissible for him to agree with the requester to vacate the property, because he is renting it and is not the owner who is allowed to dispose of the rented property. Except, perhaps, in one case: if when he rented it, he had agreed with the owner that, "I am renting this property from you for this annual or monthly rent, but I have the right to rent it to others." The believers are bound by their conditions. In this case, its ruling is the ruling of the owner; that is, he vacates and takes the price of the vacating. This is the statement regarding the vacancy fee, and this distinction is necessary.