Salaam all,
We’re looking to get a Buy To Let property soon iA, and I was looking into property management companies. I found one called Howsy, who offer a guaranteed rent scheme. Essentially, if the renter fails to pay the rent within 5 days, the company (Howsy) will pay the rent regardless.
See these links:
Is this Halal?
Wa alaykum salaam,
Do they make you pay the guaranteed rent insurance always with the management fees?
And the Howsey Protect Plan also seems like an insurance.
So there is the Standard Plan, which doesn’t include the guaranteed rent or insurance, only the property management services. However, they also allow you to add the guaranteed rent services onto that for a small fee, without adding any of the other insurance.
I believe the Protect Plan, as you mentioned, contains both insurance cover and the guaranteed rent
Can you share the agreement for the standard plan with the landlord as well as the terms with tenants?
Unfortunately I don’t have it, this was just a cursory look. However, I know that the tenancy agreement can be modified as required, so if I go with them I’ll remove any late payment fees and anything else that could be non-Shariah compliant
I can contact them and get some more information iA
Salaam @Mufti_Faraz_Adam after some digging, I managed to find both their template tenancy agreement (which can be modified) and also their T&Cs with regards to their property management plans. I’ve uploaded them both on Google Drive
Howsy property management T&Cs:
https://drive.google.com/file/d/1-x4yupRH1beb9wjX-n-2fuLpsCNrF7S0/view?usp=drivesdk
Template tenancy agreement:
https://drive.google.com/file/d/1042hDEydEWRah8lHQ_2gcUQ1F20cBUjx/view?usp=drivesdk
They’re both a bit long… Apologies for all the work Mufti saab, and jazakallah khair - may Allah reward you for all the hard work you put in!
A couple things to note: there’s clauses in the tenancy agreement detailing interest payments for late payments, which of course I will remove.
You were also correct about the Protect Plan, as it seems to be mostly various types of insurance. However, I can’t really tell if the guaranteed rent scheme is insurance or not, though it does very much seem like it
You are welcome dear brother. I have requested access to the document.
I’m not so concerned with the tenancy agreement per say as you can customise it to be Shariah compliant.
I’m more concerned about the relationship between Howsey and the landlord, and Howsey and the tenant.
These types of products which I have reviewed in other jurisdictions are times based on pure credit or invoice financing.
A product that I once reviewed was based on a cash advance to the landlord with a promissory note from the landlord to the property manager should there be default.
When financing with loans is involved, it raises medium-to-high Shariah non-compliance risks.
Plus, there seems to be the use of insurance in many of the products by Howsey.
But let me review the agreement you’ve shared so that we can get clarity on the assumptions.
Jazakallah khair @Mufti_Faraz_Adam! I’ve given you access, so you should be able to see the Howsy T&Cs now iA
I’ve had a look and, from what I can see, the Standard Plan seems Shariah compliant but the Protect Plan, including the guaranteed rent, seems very likely to not be
Hi my question is the insurance ,The rent guarantee aspect not halal as it’s based on loan or interest based?