Difference between Riba and Rent

Question

As stated in the title the question is about the difference between accepting riba and accepting rent. according to my understanding riba is when you give loan of some commodity to a person and during payback you accept some extra amount for providing the service. It seems the act of giving rent is also essentially the same. More clearly practicing riba is like renting the particular commodity. Please someone clarify me about this.

Answer 1

The basic difference Riba and rent is that ...

In the case of Riba, the commodity which you were talking about is money, and in the case of rent, the commodity is property.

So, profit obtained by renting property is allowed in Islam as opposed to earning profit by renting money, which is lending and earning interest.

Hence they're not the same.

May the creator guide us all.

Answer 2

I'd like to answer your question using a few Hadiths:

It was narrated that Abu Hurairah said: "The Messenger of Allah said: 'Gold for gold, weight for weight, like for like; and silver for silver, weight for weight, like for like. Whoever gives more or takes more has engaged in Riba." Sunan an-Nasa'i 4569

It is considered Riba when two identical items are being exchanged over a period of time for unequal quantity or weight.

Narrated Ibn Shihab: From Malik bin Aws bin Hadathan that he said: "I once said: 'Who can change some Dirham?' So Talhah bin 'Ubaidullah - and he was with 'Umar bin Al-Khattab - said: "Leave your gold with us, then return to us when our servant comes and we will give you your silver." 'Umar bin Al-Khattab said: "No! By Allah! Either give him his silver or return his gold to him. Indeed the Messenger of Allah (ﷺ) said: 'Silver for gold is Riba, except for hand to hand; and wheat for wheat is Riba except for hand to hand; and barley for barley is Riba except hand to hand; and dried-dates for dried-dates is Riba except for hand to hand.'"

[Abu 'Eisa said:] This Hadith is Hasan Sahih. This is acted upon according to the people of knowledge. And the meaning of Ha' Wa Ha' is hand to hand. Jami` at-Tirmidhi 1243

Again we see that incase of similar items wheat, barley, dates if they are not exchanged simultaneously it is considered riba. 1400 years back, silver and gold were considered currency. Hence, even though physically different they are considered identical (group as money) and if loaned should be return in the same quantity to avoid it being considered Riba.

Usmah bin Zaid Narrated that the Messenger of Allah said: "There is no Riba except in credit.' Sunan an-Nasa'i 4580

Above Hadith again stress on the time period.

Narrated Abu Sa`id al-Khudri:

Once Bilal brought Barni (i.e. a kind of dates) to the Prophet (ﷺ) and the Prophet (ﷺ) asked him, "From where have you brought these?" Bilal replied, "I had some inferior type of dates and exchanged two Sas of it for one Sa of Barni dates in order to give it to the Prophet; to eat." Thereupon the Prophet (ﷺ) said, "Beware! Beware! This is definitely Riba (usury)! This is definitely Riba (Usury)! Don't do so, but if you want to buy (a superior kind of dates) sell the inferior dates for money and then buy the superior kind of dates with that money." Sahih al-Bukhari 2312

The above Hadith again displays how transactions may involve riba and how to avoid them.

W.r.t renting housing, it was an acceptable practice during the Prophet's time too (Note: Renting of cultivable land is another issue not covered by below Hadiths)

Hadith 1:

Yahya related to me from Malik from Yahya ibn Said that Said ibn al-Musayyab was asked who was obliged to pay the rent for a woman whose husband divorced her while she was in a leased house. Said ibn al-Musayyab said, "Her husband is obliged to pay it." Someone asked, "what if her husband does not have it?" He said, "Then she must pay it." Someone asked, "And if she does not have it?" He said, "Then the Amir must pay it." - Muwatta Malik

Hadith 2:

It was narrated that ‘Alqamah bin Nadlah said: “The Messenger of Allah (ﷺ), Abu Bakr and ‘Umar died, and the houses in Makkah were still called free. Whoever needed to, lived there, and whoever had no need of them allowed others to live there (without asking for rent).” Sunan Ibn Majah - Please note this Hadith is considered Daif but shows renting was a common practice.

Answer 3

No, they are not same. Riba means when you give loan to someone,then he had to pay back added amount of the pay (based on certain decided percentage), like if he pay in 1 year, he will have to pay 10% more back, if after 2 years, then 25% and so on..

In case of rent, you do not give any money. You take small amount of money of usage of commodity needs, like house, car, bike etc, which is allowed in islam. so Riba is taking more money back on money (haram) rent, getting fixed amount of money on defined intervals of time on usage of certain commodity things.

Answer 4

You are quite correct to point out the apparent contradiction. When one reads the Koranic references to riba, particularly al-Baqarah 275-280, there is usually a reference to justice, equity, charity, or exploitation (ie "redoubling"). Riba embodies an element of unfairness, and this is consistent with the emphasis in Islam on social justice. An interest charge representing a reasonable amount for time value, illiquidity, and credit risk cannot be regarded as exploitation.

The mistake is committed by those who ignore the fact that money has time value - an accepted principle of modern finance. Money represents more than a medium of exchange, it represents productive capital (which it can buy and earn a return, such as the rental property in your example).

I know my view is at variance with the conventional approach ( but not all - see the fatwa of Tantawi on bank interest, Al Azhar University), but it would not be the first time the conventional view is wrong.

Answer 5

Riba can be easily defined as using the people in the critical time of need ( went the one who is accepting has no choice) to make money,. In the time of the prophet , the clear explanation was loaning money with interest but in the modern time in which we are living there are a lot financial practices which involve riba just like renting a house or and apartment, those people who live in rented property, after a certain time will have paid more money than what is needed to own that property and have to keep paying ,meaning if you invest 120000 in a property and put it to rent for 1000 a month, after 10 year you will get back what you've invested in it and whatever you keep taking from that rent is riba because in law of fair trade this proprietary that not belong to you anymore as you were paid back of what you've invested, renting generates more interest in long term than loaning,

Answer 6

I totally agree with above answer renting (land/property) is more Haram than to put money in a building society account/bank account. The interest you get from the bank or building society is minimal barely covering the price of inflation the value of your money when put in the bank is going down so in actual fact you get less than what you are originally putting in.

To be honest, the people who think renting property (land/house) or land are often dirty rich profiting on the misery of the poor. The landlords hold onto the assets for hundreds of years exploiting the poor who are trapped into poverty. These people circumvent the rules to their own advantage in the name of religion. It is happening in Pakistan and most of the Muslim world as corrupt Mullah's are landonwers too.