The system works like this: The house owner receives a previously decided amount from the one who needs the house. He then stays at the house of the owner for a period (definite or in defenite) without paying anything thing else (no rent). When the house owner asks him to vacate or when the other party no more want to stay there, the house owner returns his money in full and get his house vacated.
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This is not permissible as it is a form of a loan to the landlord in return that he makes you live in his house. Once he wants you to leave, he must return the loan to you.
This is Riba.