Charging rent based on the turnover of a shop

Question

Asalaamu Alaikum Warahmatullahi Wabaraqatahu,

Question on Rental charges by Landlord for a Shop.

Is it permissible for a Landlord to charge rent based on the turnover/gross sales of a shop?

E.g.:

If sales is R100,000.00 per month, then rent is 10,000.00 fixed.

However, if sales goes up to say R300,000.00 per month then rent is 5% of sales, R15,000.00

Is this permissible in Islam?

Darul Iftaa Mahmudiyyah (AskImam) · Accepted Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

One of the conditions for the validity of a lease contract is that the monthly rent must be specified.[1]

This can either be by stipulating a fixed rental, for example R10,000 or fix a base rental (which will be the minimum) and then stipulate a benchmark such as a percentage of the turnover of the shop.

Example: The minimum rental will be R10,000 which is fixed. This amount will be due at the end of the month irrespective of the business. Thereafter, a benchmark may be stipulated based on sales performance i.e. if sales are above R300,000, an additional 2% of the R300,000 will be due as rental, coupled with the base minimum of R10,000. This percentage should be mutually decided.

Therefore, in the enquired scenario, if the landlord were to fix a base rental (which will be the minimum) and then stipulate a benchmark such as a percentage of the turnover of the shop etc., then that will be permissible.

And Allah Ta’āla Knows Best

Student - Darul Iftaa

Checked and Approved by,
Mufti Ebrahim Desai.

(2021-04-30)

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