What does Islam say about renting rooms at a higher price than the owner?

Question

We're a group of students, studying at a prestigious University, we had to shift from city campus to its permanent campus due to some new Govt. policies. Currently we're living in a rural area and have been facing various problems, but the main issue abou which I am going to request you to clarify me is that, over here two students have made such an accommodation crisis that if you need a room for living you have to take the room from them with double and sometimes tripled rent price than if you were able to take it directly from the owner of the building. For example, a room would cost 1500 bucks per month if you take it from the owner, but now you have to spend 4000 bucks (more or less) for that room monthly only because of those two students, as they have already taken those room and left us with no choice but to take rooms with that high price from them. And due to lack of adequate apartments, we have no alternatives to stay in other places or buildings as they have taken all of them and making a lot of money out of it. And we are the victims of their business.

Now my question is, what they are doing, according to the rulings of islam, is it halal or haram business?

Answer 1

Subleasing at a higher rent than one is paying to the owner is permissible according to the majority (Maliki, Shafi'i and Hanbali madhab). Lease is the sale of the usufruct of some property for a period of time and by default that includes the right to benefit from it by giving it on a lease. It is a type of trade and the very point of trade is to make a profit by selling something at a higher price than what it cost you.

However, according to the Hanafis and one opinion of the Hanablis subleasing at a higher rent is only permissible if the lessor adds something to it (such as painting or adding furniture to a building). While the Hanafis also permit it if the genus of the two rents is different.

Ref: https://islamqa.info/en/answers/82568/ , https://islamqa.org/hanafi/darulfiqh/156557/is-it-permissible-to-sublease/

ذهب المالكية والشافعية إلى جواز ذلك مطلقا، أي سواء أكانت الأجرة الثانية مساوية أم زائدة أم ناقصة؛ لأن الإجارة بيع كما تقدم، فله أن يبيعها بمثل الثمن، أو بزيادة أو بنقص كالبيع، ووافقهم أحمد في أصح الأقوال عنده

وذهب الحنفية إلى جواز الإجارة الثانية إن لم تكن الأجرة فيها من جنس الأجرة الأولى، للمعنى السابق، أما إن اتحد جنس الأجرتين فإن الزيادة لا تطيب للمستأجر. وعليه أن يتصدق، وصحت الإجارة الثانية لأن الفضل فيه شبهة. أما إن أحدث زيادة في العين المستأجرة فتطيب الزيادة لأنها في مقابلة الزيادة المستحدثة.وذهب الحنابلة في قول ثان لهم إلى أنه إن أحدث المستأجر الأول زيادة في العين جاز له الزيادة في الأجر دون اشتراط اتحاد جنس الأجر أو اختلافه، وسواء أذن له المؤجر أو لم يأذن.

^{— Mawsoo’ah al-Fiqhiyyah}

Answer 2

Although making a high profit in business is not prohibited in Islam, it is discouraged. Allah will deal with people like themselves when they face problems in this world and also on Judgment Day.

The Prophet (S) replied: “Verily, God will only show mercy to those of His servants who show mercy to others.

Reference