Views Permitting Land Leasing in Islam

On the other hand, proponents of land leasing argue that leasing land under a fixed-term agreement offers benefits and remains mutually advantageous for both parties. An experienced entrepreneur can calculate potential profits and simplify accounting from the outset—for instance, when dealing with perennial crops that require a long time to yield a harvest.

Law No. 21 of 2008 concerning Sharia Banking provides opportunities for leasing movable or immovable assets to customers. This includes ijarah (standard leasing) and ijarah muntahiya bittamlik (lease-to-own). The ijarah contract involves the provision of funds to transfer the right of use or the benefit of an asset or service based on a lease transaction, without the transfer of ownership of the asset itself. This differs from ijarah muntahiya bittamlik, where the ownership of the asset is eventually transferred to the lessee.

Leasing arrangements based on clearly defined values ​​are also supported by other historical accounts. A Hadith narrated by Imam Muslim from Handalah bin Qais Al-Ansari states: "I asked Rafi’ bin Khudaij about leasing land in exchange for gold and silver. He replied that there was no harm in it. He explained that people used to lease land—prior to the time of the Messenger of Allah (peace and blessings be upon him)—in exchange for the produce from specific sections (such as those near water sources or dams) or for a specific portion of the harvest. This led to situations where one section might fail while another succeeded, or vice versa, and this was the only method of leasing practiced at the time; hence, it was prohibited. However, leasing in exchange for something clearly defined and known is permissible" (Narrated by Muslim).

It is also noted that Shaykh al-Islam Ibn Taymiyyah permitted land leasing; however, he personally stated that muzara'ah (sharecropping) aligns more closely with the principles of justice and Islamic Sharia. He stated: "Muzara'ah is more lawful than kira' (fixed-rent leasing). In kira', one party (the owner) is guaranteed a return, whereas the other (the tenant) is not."

So, it appears that the arguments supporting land leasing are not particularly strong, nor are there many of them. And Allah knows best. Wallahu a’lam.