4 ms·
Alternatives to mortgages already exist in the form of Sharia compliant shared-ownership products. Effectively what you do is pay rent on the fraction of the ho
by nly 5y ago
Alternatives to mortgages already exist in the form of Sharia compliant shared-ownership products. Effectively what you do is pay rent on the fraction of the house you don't own, while purchasing the rest at a regularly re-evaluated rate.
In this model there's no debt and therefore no leverage. Properties have to be bought by either very wealthy investors or the funding has to be crowd sourced.
- adam_arthur 5y agoHmm the mechanism isn't clear to me. What do you mean by "pay rent on the fraction you don't own". You buy a piece of the house all cash, and rent the other parts? Doesn't this imply it must be a multi-family unit? And yeah, with no debt, only the wealthy will be able to afford properties. But maybe I don't understand the mechanism.
- nly 5y agoA bunch of investors buy 100% of the property and own it through a holding company under mutually agreed investment terms. The tenant rents the property at the market rate, but gets the option to buy it bit by bit, at the current market price. When they buy e.g. 20% of the property, their rent goes down 20% (because they only pay market rent on the 80% part they don't own). Fairly simple really.