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Lessor taking rent and a percentage of the profit

Fatwaa ID: 1971

Quesetion:
Assalamualaikum. If a store owner leases space in his store for a smaller business (collects rent, can the store owner also take a percentage of that smaller businesses profits, if mutually agreed upon?

Answer:
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

The store owner may collect a defined lump sum amount as rent plus a mutually agreed amount or percentage determined by the profit of the business. However, a set benchmark based on a clear formula must be used to determine this. Furthermore, this benchmark should be subject to a ceiling, on both maximum and minimum levels. This is permissible. It is worth noting however that many jurists are not in favor of this additional floating rent.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

05/28/1445 AH – 12/12/2023 CE | AMG1-3626

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين


AAOIFI Standards (pg. 245)
5/2/3 In case the rental is subject to changes (floating rental), it is necessary that the amount of the rental of the first period of the Ijarah contract be specified in lump sum. It is then permissible that the rentals for subsequent periods be determined according to a certain benchmark. Such benchmark must be based on a clear formula which is not subject to dispute, because it becomes the determining factor for the rentals of the remaining periods. This benchmark should be subject to a ceiling, on both maximum and minimum levels. It will thus be better to have a higher lump sum amount only instead.

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