Critique this shared ownership investment fund idea, please

[David Jerusalem]

Hi BP,

Can you critique this real estate investment fund idea, tell me where it could go wrong, whether it would be worth it financially etc.  I live in a country where mortgage regulations require 25% minimum downpayment. That puts home ownership out of reach for many.

The idea is similar to UK shared ownership. Co-buy a primary residence with someone who has 7-10% downpayment. Co-buyer pays remaining 90-93% up front. 

Minority owner rents from majority owner. Can buy x% at original price for 3-5 years. Home revalued after 3-5 years and they can buy more at new valuation for next 3-5 years. Alternately can sell to majority owner or they agree to sell  property to third party. 

Benefits:

Avoids borrowing on interest, which is a religious problem here.

Profit from rent

Profit from appreciation

Get longer term, better quality tenants because they have a share and interest in maintaining the place.

Investment vehicle that also avoids companies/funds lending on interest ot doing other religiously problematic things. 

Minority owner gets a foot on the property ladder, so 

a. can gain from selling for increased price and or 

b. Own their own home

Minority owner doesn't "fall behind market" where their downpayment savings don't keep up with rising home prices. (Our market has been going up for ages, expected to continue.) Once they have bought, price of home/paying it off is fixed for next few years. 

Cons

If relationship breaks down, it can be hard to sell. E.g. what if they stop paying rent? Love to hear your ideas on this. I guess eviction proceedings /buy them out.