What is the ruling on buying a house in Britain through an Islamic bank that purchases the house as a partner (being a partner of the buyer), and then sells its shares to the buyer gradually?
If the bank conducts a Musharaka (partnership) contract that adheres to principles, then there is no objection to dealing with it. Diminishing Musharaka is when one partner promises the other to sell all or part of his share at any time he wishes, through a contract that is initiated when the intention to sell arises. For the diminishing Musharaka that ends in ownership transfer to be valid, it must pass through three contracts: the financier and the client jointly purchase the house as undivided shares, the client leases the financier's share of the property, and the client gradually purchases the financier's share. If the transaction is completed according to these regulations or a legitimate Islamic formula, then there is no objection; otherwise, a usurious loan is not permissible except in cases of dire necessity.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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