Islamic Economics Institute

Wednesday Academic Dialogue

Partnership and Rent Contracts
Mechanism to Own Properties

Dr. Fadil M.Y. Othman

Ummulqura University, Makkah

Wednesday 04 December, 2013 (01 Safar, 1435)


Owning a house is a dream for a lot of families and individuals.  However, the increasing costs of houses stands against realizing such a dream. Despite the availability of means to purchase a property through banks and financial institutions, a number of factors may inhibit utilizing such means. These include peoples’ reluctance to use interest-based transactions, high costs of funding, incompatible bank offers as well as people’s deep worries about the ever changing nature of life circumstances that could obstruct the completion of the procurement process. This presentation introduces an innovative approach that facilitates purchasing a real estate. It is based on a gradual ownership process that can be achieved through a flexible agreement process, and a fair profit from rent share. To start with, the home seller opens a bank account through which the homebuyer will be using to debit, in instalments, the total amount of money agreed upon as a price for the house.  Both parties will be signing two contracts. The first contract entails the buyer to become a partner of the property, based on the amount he deposited in the seller account.  However, as the homebuyer share of the house value increases with time, the ownership of the property gradually transfers from the homeowner to the homebuyer. In the second contract, the buyer will be considered a tenant or guarantors for the monthly rental of the property; with the benefit of his share in the rent - as partners in the property - to raise the proportion of ruling over the property. The presentation will also highlight the flexible nature of the process and how it responds to the needs of homebuyers at different levels of the process. It also show how the system caters to the different needs of those investing in real estate and resolves their concerns, such as securing the capital, maintenance, and the follow-up hassles they normally have to go through.  The economic revenues of the new approach will also be outlined during the presentation.

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