Is it permissible to write novels and will the money earned from it be halal money?
The answer
In principle, it is permissible to write a novel so long as the narrative is based on a known event. It should not be a mere fantasy.
Condition: The novel must be based on a known event, or else be beneficial with positive messages.
Explanation
If the material does not have a well-established root or history and it is merely a tale, it must be beneficial and portraying positive messages and guidance.
If one writes an account of a known event, it will be disliked to add or delete occurrences to the episode.1
With regards to the income accrued from such a profession, it will be Halāl if the written novel is of a permissible nature. If the novel is of a disliked nature, the subsequent income originating from the proceeds of selling such a book will also be disliked.
And Allah knows best.
Mufti Faraz Adam
References
1الْقَصَصُ الْمَكْرُوهُ أَنْ يُحَدِّثَهُمْ بِمَا لَيْسَ لَهُ أَصْلٌ مَعْرُوفٌ أَوْ يَعِظَهُمْ بِمَا لَا يُتَّعَظُ بِهِ أَوْ يَزِيدَ وَيُنْقِصَ يَعْنِي فِي أَصْلِهِ، أَمَّا لِلتَّزَيُّنِ بِالْعِبَارَاتِ اللَّطِيفَةِ الْمُرَقَّقَةِ وَالشَّرْحِ لِفَوَائِدِهِ فَذَلِكَ حَسَنٌ. (الدر المختار ج 6 ص 422أيج أيم سعيد)
Based on the Hanafi school and on the question as it was asked. Another mufti may reach a different conclusion. Read the disclaimer.