Analysis of the Development of Islamic Home Financing History in Malaysia

Abstract

Home is a need since ancient times hitherto. Nowadays, to acquire a home requires high capital until one needs to get funding from other party either from individual or institutional. As a result, financial institutions were established and involved in assisting buyers. In the context of Malaysia, the facility led to an establishment of a housing financing contract between bank and buyers since before the Independence Day. For Muslims, the contract was formulated to be Shariah compliance within conventional framework. Hence, this study aims to examine the development of Islamic housing financing contracts since before the independence hitherto. This study using a qualitative method in which the researchers have applied a library research method to obtain secondary data through books, journals and official websites. The study found that housing financing contracts have undergone a phase of change from a simple to a complex contract form by combining multiple contracts. The study also found that the financing contracts have undergone a transformation phase of Islamic-based products that are based on sale and purchase to Islamic based partnership products which were more in line with Shariah requirements. Housing financing products are also change to a better direction as Islamic banks as well as Shariah advisors always responded to any critics to improve their products.