Diminishing Musharaka

Diminishing Musharaka is a shared ownership arrangement where two parties jointly own an asset, such as a house or business. Over time, the buyer gradually increases their ownership share by making regular, agreed-upon payments, which include rent-like installments and a portion that reduces their ownership stake. As their ownership grows, their rent decreases. This method allows the buyer to eventually fully own the asset without paying interest, aligning with Islamic finance principles. The seller retains a stake until the final payment, after which full ownership transfers to the buyer.