Developers moot REIT alternative to FundMyHome scheme

Danial Dzulkifly
Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip delivers his speech during the Budget 2019 Commentary at Wisma REHDA in Petaling Jaya November 13, 2018. — Picture by Mukhriz Hazim

PETALING JAYA, Nov 13 — The government should consider a real investment trust (REIT) specialising in residential property as another possible solution to the lack of affordable homes, the Real Estate and Housing Development Association Institute (Rehda) proposed today.

Touting this to be an alternative to the FundMyHome peer-to-peer platform, chairman Datuk Jeffrey Ng said the proposed REIT could be used to develop public housing catering to the B40 class.

REITs are firms that build, operate or fund property development in which members of the public may participate in by buying shares in the company.

Among others, Ng said the 20 per cent upfront payment in the FundMyHome scheme made it inaccessible to lower income earners who make up the bulk of the B40 class at which it is targeted.

“With regards to the 20 per cent down payment under the scheme, as the initiative is targeted at first-time home buyers for properties between RM300,000 and RM500,000, we foresee a problem in buyers coming up with such down payment RM60,000 to RM100,000.

“As it is today, 10 per cent down payment is already a huge hindrance to home purchase for most first-time house buyers and as such, will the target group be able to meaningfully participate in the FundMyHome scheme?”

Ng made the remarks in his opening speech at the Rehda Institute 2019 Budget commentary here today.

Ng, who is also the chairman of the Malaysian REITs Managers Association (MRMA), said Rehda will work with the former to propose the REIT and its mechanism to Putrajaya.

“If they agree then the next step is to take it to the Securities Commission,” he said.

FundMyHome hit controversy after it was launched just two days after Budget 2019 and drew criticism from former prime minister Datuk Seri Najib Razak and Datuk A. Kadir Jasin, among others, over its launch timing.

Najib said it smacked of insider knowledge as the scheme was launched as though the company already knew it would be announced in Budget 2019 while Kadir said it exposed the government to suspicions of cronyism.

Earlier today, Ng said it was still unclear how the Pakatan Harapan government will deliver its pledge of a million affordable homes in the next decade.

Citing Rehda Institute’s studies, Ng said this would require 4,100 acres and cost about RM220 billion.

“How are they going to raise the funds to build such huge numbers, and how are they going to identify suitable land with a suitable ecosystem for affordable housing, remains a puzzle to the industry.

“Perhaps with concerted and holistically planned efforts among the federal government, state government and GLCs, such lands required for the delivery of these one million affordable houses can be made, provided there is strong political will,” he said.