By Mufti Muhammad Ibn AdamQuestion:
I have signed a housing contract. The terms stipulate that if I wish to vacate the property before the contract period finishes, I will be charged a monetary penalty. If I withdraw from the contract before occupying the housing, I will also be charged a (lesser) fee. Are either of these fees riba?
Answer:
In the name of Allah, Most Compassionate, Most Merciful,
If an agreement of lease for a fixed period takes place, it becomes necessary on both parties to honour the signed contract and abide by it. It is not permitted for either party to go against the lease agreement and unilaterally terminate the contract before its term without an Islamically valid excuse (‘udhr).Allah Most High says:”O you who believe! Fulfil the contracts.” (Sura al-Ma’ida, 1)