I would like to congratulate the Housing Minister (KPKT), Hajjah Zuraida Kamaruddin, for announcing the launching of a Rent To Own scheme in September. Rent To Own is an important initiative to enable the low and middle income earners own their own home.
When I was the Housing Exco in Selangor, a similar scheme named DANASEL was launched in 2015. This scheme was first initiated to assist the urban settlers of Kg Rimba Jaya, Shah Alam buy the low cost apartments offered to them. Under this scheme, the settlers will rent the apartments and have an option to buy them outright when they are able to obtain a bank loan.
From my experience with this scheme, I would like to highlight the following suggestions for the consideration of the Housing Minister,
1.) Part of the rental paid from the beginning untill the sale of the property will be deducted from the selling price.
For example, a participant of this scheme pays a monthly rental of RM800. If the participant decides to buy the property after 5 years, the total rental paid is RM48,000. If 75 percent of the rental is deducted from the property selling price, the participant will received a discount of RM36,000. The participant will only need to pay RM164,000 for a property sold at RM200,000.
2.) If the participants decide not to buy the property and move out, part of the rental paid will be returned to them.
For participants paying a rent of RM800 per month and decide to move out after 5 years, they will get back RM36,000 if 75 percent of the rental paid is returned. This amount could assist them to buy a house elsewhere. There was a similar pay back rental scheme called SMART SEWA when I was the Housing Exco in Selangor.
3.) If a participant is unable to obtain a bank loan due to poor financial standing, the rental will be converted to monthly instalments for the property. The government will have to decide the number of months to be paid untill the property is fully paid. It may take years but it should not be more expensive than a bank loan.
4.) The selling price to the participants must be the value of the property when the participants initially moved in and not the market value at the time of sale.
Rent To Own has the potential to ensure that affordable housing is accessible to all citizens especially those with inadequate funding to pay for their housing loan deposit and those that could not obtain any form of financing. The Federal Government with its vast resources must make this scheme a success.
Dato' Iskandar A. Samad
Head Coordinator
REACH ( Resource Centre For The Advancement Of The Community And Housing )
25 July 2019
When I was the Housing Exco in Selangor, a similar scheme named DANASEL was launched in 2015. This scheme was first initiated to assist the urban settlers of Kg Rimba Jaya, Shah Alam buy the low cost apartments offered to them. Under this scheme, the settlers will rent the apartments and have an option to buy them outright when they are able to obtain a bank loan.
From my experience with this scheme, I would like to highlight the following suggestions for the consideration of the Housing Minister,
1.) Part of the rental paid from the beginning untill the sale of the property will be deducted from the selling price.
For example, a participant of this scheme pays a monthly rental of RM800. If the participant decides to buy the property after 5 years, the total rental paid is RM48,000. If 75 percent of the rental is deducted from the property selling price, the participant will received a discount of RM36,000. The participant will only need to pay RM164,000 for a property sold at RM200,000.
2.) If the participants decide not to buy the property and move out, part of the rental paid will be returned to them.
For participants paying a rent of RM800 per month and decide to move out after 5 years, they will get back RM36,000 if 75 percent of the rental paid is returned. This amount could assist them to buy a house elsewhere. There was a similar pay back rental scheme called SMART SEWA when I was the Housing Exco in Selangor.
3.) If a participant is unable to obtain a bank loan due to poor financial standing, the rental will be converted to monthly instalments for the property. The government will have to decide the number of months to be paid untill the property is fully paid. It may take years but it should not be more expensive than a bank loan.
4.) The selling price to the participants must be the value of the property when the participants initially moved in and not the market value at the time of sale.
Rent To Own has the potential to ensure that affordable housing is accessible to all citizens especially those with inadequate funding to pay for their housing loan deposit and those that could not obtain any form of financing. The Federal Government with its vast resources must make this scheme a success.
Dato' Iskandar A. Samad
Head Coordinator
REACH ( Resource Centre For The Advancement Of The Community And Housing )
25 July 2019