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Insurance and Renting

Answered as per Hanafi Fiqh by Seekersguidance.org

Answered by Shaykh Abdul-Rahim Reasat

Question: Assalamu alaykum

I own a property which I want to pay a lettings agent to fully manage for me. For 10% of the monthy rental income, they will do the tenant finding, rent collection and handle all dealings with the tenant. Within this “fully managed package” is the option to pay an extra 4% per month for the Agent to deal with any tenant evictions that arise, covering all legal costs and rent guarantee for a fixed number of months. If I select this rent/legal cover option, then I will be “noted as an interested party in the Agent’s insurance policy”.

With this 4%, am I in effect buying a haram insurance policy or a comprehensive service package from the Agent? What would be the ruling according to the different schools of thought?

Answer: Wa ‘alaykum assalam wa rahmatullah wa barakatuh

I pray you are well.

It is permissible for you to enter into this agreement with the estate agent if you wish. If effect, you are paying them for a service which is clearly delineated. That is your agreement with them, and it does not contain anything impermissible.

The means they may employ to fund the service from their end does not concern you. Therefore, seeing as you are not directly entering into a interest based contract, it would be permissible for you use this service. Please ensure that all the variables are clear to you before progressing, and that there are no hidden charges, etc, or potential alterations which could lead to a dispute later. (Usmani, Fiqh al Buyu’)

I’m unable to provide you with positions from other schools of law. This is the answer I have understood from the Hanafi school, and through consultation with a senior scholar. Allah knows best.

May Allah grant you the best of both worlds.

Wassalam,
[Shaykh] Abdul-Rahim Reasat

This answer was collected from Seekersguidance.org. It’s an online learning platform overseen by Sheikh Faraz Rabbani. All courses are free. They also have in-person classes in Canada.

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