My brain is a wonderful thing. Sometimes ideas just popped out like that after my nerves chew on ideas inputted by my sensory system. One of those ideas today is on how to do home ownership loan, syariah way.
The idea is simple: In Islam, you must not put interests on loan. You can only demand a portion of the ownership of whatever activities that is funded by that loan. Now the trick is for banks not to call it a home ownership loan, but home ownership capital. That way, a bank can demand a portion of home ownership legalized in a form of certification of ownership. The bank can then sell this participation of ownership to investors, for a profit of course. That investors can then claim a portion of profits if the home owner decide to sell the house or rent it.
The catch is the assumption that a price of a house will always increase or there will always be renters. That’s a normal assumption, and an assumption that can be justified by the bank or investors: they will not agree to sell a house or rent it if the price is not right.
See, how simple can it be? No interests, no bubbles, no worries.