Penang exco: Rent-To-Own scheme should be for properties below RM150,000 only

GEORGE TOWN, Oct 21 — The federal government's Rent-To-Own (RTO) Scheme for housing projects up to RM500,000 should be reviewed to prioritise low cost and low medium-cost projects first, said Penang state exco Jagdeep Singh Deo.

He disagreed with the federal government's price limit for the RTO scheme that extended to properties valued up to RM500,000.

“Those who can afford to buy RM500,000 houses do not need help, it is those who can't even afford the low-cost RM42,000 and low medium-cost of RM72,500 who needs help,” he said in a press conference after officiating World Town Planning 2019 celebrations this morning.

He said the priority should be given to those who are having problems securing loans for low cost and low medium-cost housing worth RM42,000 and RM72,500 respectively.

He said the affordable housing projects in Penang are below RM300,000, even on the island, so the federal government's limit for RTO schemes at RM500,000 does not make sense.

“We can even compromise to allow RTO schemes to extend to projects priced at RM150,000,” he said.

He pointed out that the RTO schemes in Penang were for low-cost housing of RM42,000 per unit in which the buyer pays RM200 per month for 22 years.

“Paying RM200 per month for them is affordable and I've done some calculations for RTO schemes for RM500,000 houses, this translates to RM2,093 a month for 20 years, who can afford this?” he asked.

He said even for properties priced at RM150,000 per unit, the buyer can still afford to pay RM500 per month for 20 years.

“It doesn't make sense that the buyer has to pay RM2,000 per month under the RTO scheme which the low-income group could not afford, I ask the federal government to seriously reconsider this,” he said.

During the tabling of Budget 2020, Finance Minister Lim Guan Eng announced the RTO financing scheme to assist those who could not afford the initial 10 per cent deposit to buy their first homes for properties priced up to RM500,000.

Under the scheme, financing of up to RM10 billion will be provided by financial institutions with support from the government through a RM3 billion guarantee.

Applicants in the scheme will rent the property for up to five years and after the first year, the tenant will have the option to purchase the house based on the price fixed at the time of the tenancy agreement is signed.

There will also be stamp duty exemptions for the transfer of property between the developer and financial institution and between the financial institution and the buyer under the scheme.