---
title: "What is Variable rental (benchmark-linked ijarah rent)? | IslamicOpenFinance™"
description: "Ijarah rent that is fixed for the first period and then reset by a clear benchmark formula agreed at the start."
url: https://islamicopenfinance.com/glossary/variable-rental/
lang: en-GB
source: "IslamicOpenFinance"
---

[Glossary](https://islamicopenfinance.com/glossary/) / [Lease, agency and service contracts](https://islamicopenfinance.com/glossary/#lease)

Lease, agency and service contracts

# Variable rental (benchmark-linked ijarah rent)

Ijarah rent that is fixed for the first period and then reset by a clear benchmark formula agreed at the start.

A variable rental is an ijarah rent that changes over the term according to a method agreed in the contract. AAOIFI's ijarah standard requires the rental for the first period to be fixed and allows later periods to be set by a benchmark, provided the formula is clear and not open to dispute, and it says the benchmark should be subject to a ceiling and a floor. Variable rentals are common in home finance, so the formula, the reset dates and the caps should be stored as data rather than buried in a document.

## Sources

- [AAOIFI Shari'ah Standards, English edition (full text, PDF): Shari'ah Standard No. 9, Ijarah, items 5/2/1 and 5/2/3](https://aaoifi.com/wp-content/uploads/2017/12/Shariaa-Standards-ENG.pdf)

This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.

## Related terms

[**Ijarah** A lease: the lessor owns the asset and sells its use for an agreed rent over an agreed period.](https://islamicopenfinance.com/glossary/ijarah/) [**Diminishing musharakah** A partnership in which one partner buys the other's share in stages until it owns the whole asset; common in home finance.](https://islamicopenfinance.com/glossary/diminishing-musharakah/) [**Ijarah muntahia bittamleek** A lease that ends with ownership passing to the lessee, through a separate sale or gift promised by the lessor.](https://islamicopenfinance.com/glossary/ijarah-muntahia-bittamleek/) [**Rate of return risk** The risk that changes in market rates affect an Islamic bank's net income; the analogue of interest rate risk in the banking book.](https://islamicopenfinance.com/glossary/rate-of-return-risk/)

**Lease, agency and service contracts**

1. [Ijarah](https://islamicopenfinance.com/glossary/ijarah/)
2. [Ijarah muntahia bittamleek](https://islamicopenfinance.com/glossary/ijarah-muntahia-bittamleek/)
3. [Wakalah](https://islamicopenfinance.com/glossary/wakalah/)
4. [Kafalah](https://islamicopenfinance.com/glossary/kafalah/)
5. [Hawalah](https://islamicopenfinance.com/glossary/hawalah/)
6. [Ju'alah](https://islamicopenfinance.com/glossary/jualah/)
7. [Rahn](https://islamicopenfinance.com/glossary/rahn/)
8. [Ijarah mawsufah fi al-dhimmah (forward lease)](https://islamicopenfinance.com/glossary/ijarah-mawsufah-fi-dhimmah/)

[All 221 terms](https://islamicopenfinance.com/glossary/)