Charging a penalty for late payment and calling it admin fees

Q: I am currently renting my business premises from a an Islamic trust. They have amended the current lease agreement to state that 2% interest will be added to late payment of even a months rent. When the Muslim tenants objected, they changed the word interest and now describe it as admin fees.

Is this allowed? This very trust contributes to the funding of the masjid and Islamic school.

A: Changing the words does not make the interest halaal.

And Allah Ta'ala (الله تعالى) knows best.


Answered by:

Mufti Ebrahim Salejee (Isipingo Beach)