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Fatwa CenterBuying property through interest-based contract
Question
Assalaamu alaykum. Around six years ago, I and my sister invested our money by buying property through an interest-based mortgage in UK. Now, seeing the effects of indulging in interest, we have decided to repent and sell the property due to religious and personal reasons. The property was put for rent. The tenants used to pay us 1200 pounds, and we used that money to pay 600 to the bank for the mortgage while we used to keep the other 600 as profit. My question is about the profit that we have accumulated in the past from the tenants. Is it halal? Also, if we sell the property and make profit out of the sale due to the rise in value, would that profit be halal? May Allaah reward you.
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah and that Muhammad, sallallaahu ʻalayhi wa sallam, is His slave and Messenger.
Verily, dealing in interest is one of the gravest and most sinful acts; Allaah, The Exalted, says (what means): {O you who have believed, fear Allaah and give up what remains (due to you) of interest, if you should be believers. And if you do not, then be informed of a war (against you) from Allaah and His Messenger...} [Quran 2:278-279] Allaah, The Exalted, stated that whoever deals in interest subjects himself to the stern warnings of a war against him from Allaah and His Messenger, as underlined in the verse.
Moreover, the Prophet, sallallaahu ʻalayhi wa sallam, cursed the consumer of interest, its payer, the one who records it, and its two witnesses, and he said, “They are all equal (in sin).” [Muslim]
So, whoever engages in interest has committed a serious sin that requires repentance by showing remorse, having the resolve to give it up, refraining from committing it in the future, and seeking forgiveness from Allaah for that sin. Please, refer to fatwa 86527.
As for the permissibility of selling the property that you purchased through a transaction that included interest, gaining profit from the sale, and availing yourself of the money earned through renting it out, you should know that there is no harm in doing any of that. The unlawfulness is related to your liability, and not to the property itself.
The property in reference is your personal property, and you are entitled to freely dispose of it by selling it for a higher price than you originally bought it for. You are also entitled to rent it out and avail yourself of the rent, just like any other property that you possess. However, you are obliged to repent to Allaah of the sin that you have committed, as we mentioned above. For more benefit, please refer to fataawa 102369 and 130992.
Allaah knows best.
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