KUALA LUMPUR, Jan 20 — Malaysia’s first rent-to-own scheme HouzKEY recently opened its digital platform to the Klang Valley, but questions emerged soon after about the affordability of its offerings.

Managed by Maybank Islamic Bhd via a portal dubbed Maybank2Own, the scheme was lauded by developers as the "best option” to increase house purchases, but worker unions said it is unlikely to boost home ownership among among low and middle income earners due to the rental prices.

Malay Mail performed several simulations to test the claims and determine if the average Malaysian wage earner is able to participate in the novel scheme or if it caters to those making more than typical, even those in Klang Valley.

Properties on offer

According to Maybank, the portal features a range of properties from 12 developers including EcoWorld, SP Setia, Mah Sing, Sime Darby Property, Gamuda Land, UEM Sunrise, Selangor Dredging, and Mitraland.

Currently, there are 25 developments on offer.

Shah Alam has four such developments, the most, while Kuala Lumpur and Bangi each have three.

The cheapest so far is the EcoSky service apartments in Jalan Ipoh, Kuala Lumpur, which is on promotion by the portal for the next 55 days; monthly rental there starts at RM2,357.50 for a 904 sq ft unit.

Without the promotional offer, the next cheapest option is the Galleria service apartments by Global Oriental in Seri Kembangan from RM2,387.30 per month for 760 sq ft and above.

The most expensive option is the M Residence, which are 2.5 or three-storey link houses in Rawang by Mah Sing, with floor area of 3,164 sq ft.

Maybank2own will offer three more projects in the future, two of which would cost less than RM2,000 per month: Mah Sing’s Cerrado service apartments in Bangi (from RM1,920) and EcoWorld’s Harmoni cluster homes in Semenyih (from RM1,620).

How much can Malaysians afford to rent?

To gauge affordability, Malay Mail applied several income levels derived from official data for the simulations.

According to the data from the Statistics Department released in October 2017, median household income was RM5,228 in 2016, up from RM4,585 in 2014.

However, the median income of the current target market of Maybank2Own — Klang Valley residents — is significantly higher than the rest of Malaysia: RM9,073 in Kuala Lumpur, RM8,725 in Putrajaya, and RM7,225 in Selangor.

For the simulation, Malay Mail used 30 per cent of gross income as the maximum monthly rental payments — based on the popular 50-30-20 ratio used for prudent financial planning — which later can be converted into mortgage under the scheme.

Using the national median income, a Malaysian should spend no more than RM1,568 for monthly rent, and will find nothing within HouzKEY’s offering at the moment.

Even drawing strictly from the median income of the so-called middle class or M40 does not improve things much; earning RM6,275 still does not make any of the developments on HouzKEY available.

The median income in Klang Valley, however, opens up four possibilities: EcoSky, Galleria, Verdi Residence in Cyberjaya, and Vista Mahogani in Kajang.

Things also improve markedly for would-be buyers in the top earning (T20) households, whose national median income was RM13,148 in 2016.

Those in this group will have properties in 20 of the 25 developments inside their range of affordability.

Maybank2own provides an eligibility calculator to help prospective renters determine how much monthly rent they are eligible to apply for, by providing their income, expenses, and guarantor’s net income.

Those with guarantors become eligible to apply for units with rentals that are significantly higher rental than those without and much more than is financially prudent.

Maybank said since the site was launched, almost 70 per cent of those who have expressed interest were between 25 and 34 years old.

Malaysia continues to deal with a shortage of affordable homes, which required the federal government to institute measures to curb speculation and rein in rising prices.

Last year, Bank Negara Malaysia said Malaysians cannot afford to buy homes as prices were becoming unaffordable.

A report by the Khazanah Research Institute in 2015 said the median house price in Malaysia was 4.4 times the median annual household income in latest available data, making the housing market "seriously unaffordable” by global standards.