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How can rental be adjusted in Diminishing Musharakah products?

Answered as per Hanafi Fiqh by Darulfiqh.com

Question:

Jazak Allah for putting together such a comprehensive resource for various questions/concerns that are often overlooked regarding jurisprudence.
I have been looking into buying a home and haven’t really found a model that is interest-free and fits well with the principles of musharakah (based on my reading thus far).
Traditional models behave in a way where two parties combine their capital to purchase a property. The debtor (the person buying the
house) typically then pays rent on their creditor’s share of the property if they’re living in it, while also trying to contribute towards buying back a portion of the house currently owned by B. And the process is repeated until the ownership fully transfers from B to A.
The creditor (the person financing the rest of the property) essentially becomes a silent partner since the debtor is responsible for property maintenance, taxes, etc.
I am in talks with my brother to help me buy a house using such a model so that I am able to get interest-free money to buy a house and I pay rent to my brother and gradually buy back the house from him by paying an extra portion on top of the rent.
The concern here is:
1) Since house value fluctuates based on the market, then the rent paid by the debtor also supposed to go up/down? If so, then how often do we need to make an adjustment.

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Diminishing Musharakah (Equity partnership) is a Shariah compliant home purchase plan.  It is incudes multiple phases and stages.  In essence, the client and the financier form an equity partnership and each own a percentage of the asset.  The client purchases the share of the financier over a number of years through acquisition payments.  In the interim, the financier leases their share to the client who pays a rental in lieu of it.  The rental can be adjusted although it is not necessary.  The rental can be adjusted in the following ways:
(a) The lease can be contracted with a condition that the rent shall be increased according to a specified proportion (e.g. 5%) after a specified period (like one year) over the span of the entire lease.
(b) The rent can be pegged as a percentage where the rent is calculated as 1% of the financier’s share for example.
(c) The lease can be contracted for a shorter period after which the parties can renew the lease at new terms and by mutual consent, with full liberty to each one of them to refuse the renewal, in which case the lessee is bound to vacate the leased property and return it back to the lessor.

And Allah Ta’ālā Alone Knows Best

Mufti Faraz Adam 
www.darulfiqh.com

This answer was collected from DarulFiqh.com, which is operated under the supervision of Mufti Faraz ibn Adam al-Mahmudi, the student of world renowned Mufti Ebrahim Desai (Hafizahullah).

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