Ruling on "Pagri" (Premium Payment) for Renting Shops or Properties

Author: Saudi Fatwa Committee (Lajnah Al-Da'imah)

What is "Pagri"?​

"Pagri" refers to a system where a tenant pays an additional amount, over and above the agreed rent, to acquire the rental rights to a property, such as a shop, house, or showroom. This system is common in some markets and varies depending on the importance of the location and demand.

Islamic Ruling on "Pagri"​

The ruling depends on the circumstances:

1. Subletting During Active Rental Period:
   
   • If a tenant rents out the property to another party during the remaining term of their lease:
     • Permissible: The tenant may sublet at the same or a different rent rate (higher or lower) provided:
       • There is no fraud or unfair profiteering.
       • The subletting is within the agreed lease term and complies with the conditions set by the original property owner.
     • Evidence: Subletting falls under the rights granted to the tenant for the duration of the lease, as long as it aligns with the original agreement.
2. After Lease Term Expiry:
   
   • If the lease term has ended, the tenant has no right to sublet the property or demand any additional amount for transferring rental rights.
     • Prohibited: Using or renting out the property after the lease term without the owner's consent is haram.
     • Any money received in such transactions is considered unlawful (mal haram), as it violates the property owner's rights.
3. Without Landlord's Consent:
   
   • Any transaction involving the property without the explicit consent of the landlord is not permissible. The property owner retains the exclusive right to use and benefit from their property once the lease term ends.

Quranic and Hadith Evidence​

1. Prohibition of Unlawful Gain:
   Allah commands:
   "Do not consume one another's wealth unjustly."
   [Surah Al-Baqarah (2:188)]
2. Respect for Rights:
   The Prophet Muhammad (ﷺ) said:
   "The wealth of a Muslim is not lawful for another unless he gives it willingly."
   [Sunan Al-Kubra by Al-Bayhaqi, Hadith 11061]

Guidelines for Tenants and Property Owners​

1. Tenant’s Rights:
   
   • The tenant can only utilize or transfer rental rights during the active lease term.
   • Subletting must comply with the original lease agreement.
2. Property Owner’s Rights:
   
   • Once the lease term expires, the tenant must vacate or negotiate a new agreement with the owner.
   • Unauthorized use of the property after the lease ends is a violation of the owner's rights.
3. Avoiding Unjust Practices:
   
   • Charging excessive amounts as "Pagri" or transferring rights without the landlord's consent is considered unjust enrichment and is haram.

Conclusion​

• Permissible: Subletting or charging a premium during the lease period with the owner's consent and within agreed terms.
• Prohibited: Any transaction involving "Pagri" after the lease term ends or without the owner's approval. Such earnings are unlawful and amount to consuming haram wealth.