Why don't Islamic banks use local rental rates as benchmarks for home finance products?
The rental market varies across the country, from region to region. Even within the same city or town, rental values can vary significantly.
If an Islamic bank attempted to use local rental markets, there would be too much variation across the country and they would not be able to offer a fair and consistent rental rate for its products. Not only is this against the Sharia but it would also be more costly for the customer.