Wider Application for Rent-to-Own Concept to Encourage Home Ownership: CM
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Chief Minister Datuk Seri Mood Shafie Apdal believes that to encourage home ownership, the Rent-To-Own (RTO) concept needs to be put in a wider application.
The concept allows people to rent a property for a period of 5 years with an option to buy when they cannot make the down payment or obtain a bank loan.
“RTO allows the purchaser to raise their down payment and improvement of their credit rating to get approval for the housing loan” said Shafie. “On the subject of home ownership, one way to encourage it is putting the rent-to-own concept in wider application.
“I was told that Shareda is in the process of establishing a SPV (special purpose vehicle) for the promotion of the RTO scheme in Sabah,” he said at the National Home Ownership Campaign (HOC) 2019, organized by Shareda (Sabah Housing and Real Estate Developers Association and Property Hunter.
The Chief Minister was relieved to learn that, according to the report by National Property Information Centre (NAPIC), only 3.24 per cent of the national total of 30,115 at the third quarter of 2018 was made up of unsold residential Sabah Properties.
“As the property sector is a major mover of our economy, a vibrant property market is a reflection of a robust economy. Therefore, having too many properties unsold means that huge capital is being tied up, and if left unchecked, it can reach a stage where it can have negative risk on the economy,” said Shafie.
Malaysia has been struggling with providing enough affordable housing in the country, he said, adding the Bank Negara research data show more than 83pc of the unsold residential units are those priced above RM250,000 with many costing up to RM500,000.
“But by Malaysian median, an affordable price range is RM300,000 per unit,” he said, while commending the association members’ pledge to build affordable houses in Sabah with prices below RM300,000.
“I understand that many members of Shareda have pledged to and are building affordable houses in Sabah with prices below RM300,000. I commend them for their efforts in matching their projects with affordability in the market, given that the government was always striving towards owner-occupied home ownership by keeping a tight lid on prices.
“In fact, Sabah is the only state that has this price control mechanism, and I want to assure Shareda that my administration is taking note of your appeal to remove it. We realise that red tape contributes to the developers’ holding costs and, therefore, house prices. We are looking into streamlining the approval process to make it more transparent and business friendly.”