Short answer
Yes. Buying property to rent out or to sell at a profit is lawful trade, and rent is halal income. What can make it haram is the financing (a conventional mortgage or hard-money loan with interest), renting space to a haram business, or dealing in property you do not yet own.
Buying, renting out and selling property is permissible. Rent for a known period at a known amount is lawful. Interest-based financing is haram. Renting premises to a business whose main activity is haram, such as a bar or liquor store, is something present-day Hanafi muftis tell you to avoid.
The four schools agree on this.
Explanation
Land and buildings are real assets, and Islam has no objection to earning from them. Renting a house or shop for a fixed, known rent was common in Madinah, and when Rafi' ibn Khadij was asked about renting land for gold and silver he said there was no harm in it. What was forbidden was a share tied to one patch of crops, where one side might get nothing.
Points to check:
- Financing: buy with cash, partners or genuine Islamic finance. A conventional mortgage, bridging loan or hard-money loan is riba. See Is a mortgage haram?
- Tenants: renting a home to anyone, Muslim or not, is fine; what they do privately is on them. Imam Abu Hanifa held that rent is lawful even when the tenant uses the place for sin, while his two students disliked it. Present-day muftis advise against knowingly renting a unit for a bar, liquor store, casino or conventional bank.
- Flipping: buying, renovating and selling is ordinary trade.
- Wholesaling: selling a property you have only put under contract, or assigning that contract for a fee, raises the rules on selling what you do not own. Ask a mufti about your exact contract.
- REITs and property funds: treat them like shares and check for interest-heavy debt.
- Short-term rentals such as holiday lets are permissible on the same rules.
Pay attention to the tenant's rights: keep the property safe, return deposits fairly and do not withhold repairs you agreed to. Zakat is not due on a rental property itself, only on the rent you have saved; see zakat on rental property. Property bought to resell is trade stock and zakatable at its market value.
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ ﴿٢٧٥﴾
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Profit from buying and selling property is trade; financing with interest is not.
Quran, Surah An-Nisaa 4:29
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوا۟ لَا تَأْكُلُوٓا۟ أَمْوَٰلَكُم بَيْنَكُم بِٱلْبَٰطِلِ إِلَّآ أَن تَكُونَ تِجَٰرَةً عَن تَرَاضٍۢ مِّنكُمْ ۚ وَلَا تَقْتُلُوٓا۟ أَنفُسَكُمْ ۚ إِنَّ ٱللَّهَ كَانَ بِكُمْ رَحِيمًۭا ﴿٢٩﴾
O you who have believed, do not consume one another's wealth unjustly but only [in lawful] business by mutual consent. And do not kill yourselves [or one another]. Indeed, Allah is to you ever Merciful.
Rent and sale are lawful exchanges by consent.
Sahih Muslim 1547
Sahih... فأما شيء معلوم مضمون فلا بأس به ...
"As for something known and guaranteed, there is no harm in it."
Rent for a fixed, known amount is lawful.
Where the ruling is recorded
- al-Hidaya, Kitab al-Ijarat; and Kitab al-Karahiyya, on renting a house to one who will use it for sin. Conditions of a valid lease, and the difference between Abu Hanifa and his two students on such tenants.
- Fiqhi Maqalat (Mufti Taqi Usmani), Essays on ijarah and on real estate financing. Modern application of leasing rules.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.