Musharakah Mutanaaqisah (Diminishing Partnership)
This is used to help members in purchasing personal home. This is done when a member contributes a percentage of the cost of the house and asks the cooperative to support him/ her with the remaining percentage. The ownership of the house remains with the cooperative and the member based on individual portion of the shares. The member becomes the tenant by paying regular rent on the house. Full ownership of the house will be then gradually transferred to the member based on his/her efforts in buying out the shares of the cooperative and the stipulated agreements on the period and term of repayments. Through this product, member eventually becomes owner of the house and the society also benefits through rent payment. For example, if the member has contributed one‐quarter to the price of the house and the co‐op contributed three‐quarters, the homebuyer pays three‐quarters of the value to the co‐op in rent. Members increase their ownership by purchasing more shares and the rent goes down in the same ratio until it is phased out completely.