Another Rent-to-Own (RTO) news. I think this will be something prominent in the future, just like proptech stuffs. Partly due to home prices which many said is too expensive for the average Malaysians and partly because the average Malaysians are also having lesser money in their pockets because there’s way too many temptations. Earlier article here: When everything we want to buy seems so easy; monthly
Article in Edgeprop.my here. UEM Sunrise Bhd’s managing director and CEO Anwar Syahrin Abdul Ajib said of its RTO expansion plans. He said this to Bernama. “This will enable the young buyers to plan their finances and facilitate their borrowings. The scheme will also help to mitigate projects/developments being empty and untenanted, which may result in unnecessary maintenance costs.” UEM Sunrise launched its EASY Own Plan, in August 2017 and recently began collaborating with Malayan Bank Bhd (Maybank) through the latter’s HouzKey scheme. It has two projects under the RTO scheme namely Verdi Eco-dominiums in Symphony Hills, Cyberjaya, and Residensi Ledang in East Ledang, Iskandar Puteri. Both projects were completed in 2016. He does not have glowing comments about government’s plan to ease the procedure for housing loan applications. He shared, “About 25% of housing loan applications were rejected with the most common reasons cited being insufficient income to support debt repayment, adverse credit history and inadequate income or financial documentation. Banks are remaining vigilant in assessing the sustainability of borrowers’ sources of income and financial commitments.” He concluded by saying, “Our RTO scheme will offer property buyers an alternative pathway to owning a house and provide a buffer period for potential house buyers to sort out their personal finances and build up their credit standing, before they start applying for a loan.”
I think I agree with most of his views. The issue with affordability is one with the first-time home buyers and they need to have the flexibility to create their own ‘image’ (credit standing) with the banks who may not be willing to release a few hundred thousand ringgit to them yet. With a record of continuous repayments, banks would be able to assess that commitment and with the passing years, the income would eventually grow too. Frankly, stretching the payment a little is always possible, just need to control the temptations. If I am the bank, I love stability in customers’ monthly repayments and RTO schemes facilitates this. The current number of unsold units in the market could also be better channelled to potential buyers too. Earlier article about unsold units here: Unsold homes highest ever in history. 50 pct due to Johor, Penang and Kedah.Happy getting that first home through RTO schemes yeah. Else, secondary market can also be another choice too.
written on 18 June 2018
Next suggested article: Expert Series with Charles Tan – First property guide for all, especially couples