Musyarakah Mutanaqisah-Based Home Financing: Sharia Compliance, Legal Legitimacy, and Operational Challenges in Islamic Banking

Authors

DOI:

https://doi.org/10.30983/al-hurriyah.v11i1.10320

Keywords:

Islamic Banking, Legal Certainty, Musyarakah Mutanaqisah, Sharia Financing, Home Ownership

Abstract

Musyarakah mutanaqisah-based home ownership financing (KPR) has become increasingly popular, although this contract was initially developed for productive activities. This study aims to examine the suitability of musyarakah mutanaqisah for home financing under Sharia principles and applicable positive law, analyze its implementation in Islamic banking, and identify problems arising in practice. Using normative legal analysis with conceptual and practical approaches, this study examines the legitimacy and implementation of musyarakah mutanaqisah based on Bank Indonesia regulations and relevant DSN-MUI fatwas. The findings indicate that the existing regulatory framework provides legal legitimacy for applying musyarakah mutanaqisah to home financing. Although originally associated with productive activities, musyarakah mutanaqisah may also be applied to consumptive financing, provided that its pillars, conditions, and Sharia principles are fulfilled. In practice, home financing through musyarakah mutanaqisah employs a modified parallel contract model adapted to the characteristics of residential financing. Nevertheless, its implementation presents several legal and practical challenges, particularly regarding costs imposed on customers, taxation, and collateral arrangements. The study concludes that musyarakah mutanaqisah is legally and Sharia-compliant for home financing when implemented according to applicable regulatory requirements and contractual principles. Academically, this study contributes to the discussion of contemporary Islamic banking by clarifying the transformation of musyarakah mutanaqisah from a predominantly productive financing instrument into a Sharia-compliant mechanism for residential ownership. It also highlights the need for regulatory and contractual improvements to address cost, tax, and collateral issues and strengthen legal certainty and fairness for customers.

Author Biographies

Izzy Al Kautsar, Universitas Muhammadiyah Yogyakarta

Izzy Al Kautsar, S.H., M.H., is a lecturer in Business Law at the Faculty of Law, Universitas Muhammadiyah Yogyakarta (UMY). His academic interests include competition law, consumer protection, business practices, and financial institutions law. He has authored several publications addressing issues such as disruptive innovation in competition law and information disclosure in trade. He is also actively engaged in teaching and mentoring students within the Department of Business Law. His academic work reflects a commitment to advancing the understanding of how legal frameworks adapt to the evolving dynamics of business, technology, and society in Indonesia.

Ahdiana Yuni Lestari, Universitas Muhammadiyah Yogyakarta

Ahdiana Yuni Lestari, S.H., M.Hum., is a lecturer in Private Law at the Faculty of Law, Universitas Muhammadiyah Yogyakarta (UMY). Her areas of specialization include Islamic civil law, customary law, health law, family law and customary contractual law. She serves as the Coordinator of the Legal Laboratory at UMY. She obtained her Master’s degree in Legal Studies and has engaged in teaching, research and public outreach in the fields of family law and customary law. With a commitment to bridging academic scholarship and social application, she has been involved in discussions around inter-religious marriages and their legal implications in Indonesia. Her work reflects a dedication to advancing legal understanding in contexts where modern statutory law and customary practices intersect.

Ayi Leoni Putri, Universitas Muhammadiyah Yogyakarta

Ayi Leoni Putri, S.H., is a Bachelor of Laws graduate from the Faculty of Law, Universitas Muhammadiyah Yogyakarta (UMY), with a specialization in Public and Criminal Law. She has participated in several national law debate competitions and gained experience as an intern at the Legal Practice Unit Faculty of Law, Universitas Muhammadiyah Yogyakarta. Her research interests include criminal law, health law, restorative justice, and comparative legal studies.

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Published

2026-06-10

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Muhammad, D. W., Al Kautsar, I., Lestari, A. Y., & Putri, A. L. (2026). Musyarakah Mutanaqisah-Based Home Financing: Sharia Compliance, Legal Legitimacy, and Operational Challenges in Islamic Banking. Al-Hurriyah: Jurnal Hukum Islam, 11(1), 179–185. https://doi.org/10.30983/al-hurriyah.v11i1.10320

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Vol. 11 No. 1 (2026): June 2026

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