Warning of ‘homeless generation’, HBA wants Rent-to-Own’ for middle-class too

By Ida Lim
PR1MA had on February 13 said a total of 1,377,639 people nationwide have registered for its homes. — Picture by Hafiz Sohaimi

KUALA LUMPUR, April 4 — Putrajaya should expand "Rent-to-Own" housing schemes to cover the middle-class who are also struggling to buy homes and prevent the country from ending with a "homeless generation", the National House Buyers Association (HBA) said.

HBA honorary secretary-general Chang Kim Loong said that while there are merits to the second finance minister's remarks last Thursday, that those seeking to buy houses should not enter into long-term financial commitment until they are ready, this should also be weighed against other factors.

"However, whether such prospective house buyers should just continue renting until they are ready is another issue, especially in view that increase in house prices are always going to outpace increase in salaries," he told Malay Mail Online in an email interview.

"HBA has been warning for many years that Malaysia is going to face a potential housing crisis in the form of a 'homeless generation', where an entire generation or even generations of prospective house buyers, from the lower to middle income segment and our fresh graduates will not be able to buy their dream homes," he added.

He claimed the association's warning has come true, citing Bank Negara Malaysia's (BNM) 2016 annual report that said the increase in house prices in Malaysia has since 2012 outstripped wage growth and left the median house prices beyond the reach of most Malaysians.

Describing the current situation as an "impending national crisis", Chang said HBA believes the traditional method of saving up for a 10-per cent downpayment and taking a housing loan for the remaining 90 per cent of the property price is "no longer viable" for those falling in the lower and mid-income groups.

He was referring to the Bottom 40 per cent (B40) and Middle 40 per cent (M40) of the Malaysian population, respectively those with a monthly household income of below RM3,900 and those with monthly household income of between RM3,900 to RM8,400.

“Unless a clear and viable long term solution is implemented, this 'Homeless Generation' will explode and cause many social problems," Chang said.

He noted that the “Rent-To-Own” scheme is traditionally for low-cost and medium-cost properties such as the People's Housing Project (PPR) public housing units, but said such efforts should be expanded.

"However with even the M40 unable to afford to buy their dream homes, a wider and more holistic nationwide RTO scheme is needed," he said.

"To reiterate, HBA would call for the government to urgently convene a task force comprising both Federal and State Government Agencies to urgently implement a nationwide Rent-to-Own Scheme catering to the B40 and M40 and nip this 'Homeless Generation' problem before it spreads out of control," he added.

Rent-To-Own: What Malaysia has now

Rent-to-own schemes currently offered by the federal government are aimed at those who fail to secure housing loans from banks, but fall within the eligible income bracket for affordable housing and low-cost housing.

Under the federal government’s 1Malaysia People’s Housing Scheme (PR1MA) that started operations in 2013 and was given the mandate of producing 500,000 affordable houses priced between RM100,00 to RM400,000 for the nation’s M40 group, successful applicants with monthly household income of up to RM15,000 but fail to obtain housing loans can opt for the Rent-To-Own (RTO) programme.

According to the PR1MA website, those who go under the RTO programme can rent the unit for up to 10 years before buying it after five or 10 years at a predetermined price. The website’s estimated one-off deposit under the RTO for a RM400,000 PR1MA home is below RM5,800, far lower than the traditional 10 per cent downpayment which would in this case be RM40,000.

As for the RTO scheme for selected PPR housing units priced between RM30,000-RM35,000 in peninsular Malaysia and RM40,500 in east Malaysia, the federal government started it this year to help the B40 group who fail to get housing loans to own homes.

To qualify for the PPR’s RTO scheme that comes with a low-interest loan of 10 to 25 years, eligible applicants earning below RM2,500 monthly must first show that they are able to pay rent for two years and comply with conditions fixed by the National Housing Department, a deputy minister had said last December.

The number of PPR units in the RTO category currently available appears to be low, with Urban Wellbeing, Housing and Local Government Ministry saying last month that the new scheme has been implemented in PPR Gua Musang with 1,000 units and that the latest with 300 PPR units is in Taman Danau, with two more in the pipeline at the PPR Lembah Subang 2 and PPR Ladang Siliau.

While Putrajaya has announced a slew of affordable housing schemes such as the 1Malaysia Civil Servants Housing Scheme (PPAIM) and Federal Territory Affordable Homes Programme (RUMAWIP), supply has yet to keep up with demand, with the BNM 2016 annual report predicting that the shortage could exceed one million units by 2020.

PR1MA had on February 13 said a total of 1,377,639 people nationwide have registered for its homes. It also said PR1MA’s board had approved the construction of 260,188 units and that 132,352 of this figure is currently being built, while the target for completed homes by the end of 2017 is 15,000.

Last October, Minister in the Prime Minister’s Department Datuk Seri Shahidan Kassim said 1,332 units under PR1MA have been completed.