Introducing govt-supported rent-to-own scheme, extending Youth Housing Scheme
KUALA LUMPUR: If one looks at the recently tabled Budget 2020 from the eyes of millennials and those of the Z generation or Gen Z, as they are called, there appears to be a decent chunk dedicated to them, so much so that Youth and Sports Minister Syed Saddiq Syed Abdul Rahman has termed it a “2020 Youth Budget”.
Cognisant that affordable housing is a prominent issue among youths, the government plans to collaborate with financial institutions to introduce a rent-to-own financing scheme to help those who are unable to afford the initial 10% deposit, or get financing to buy their first home. Through this scheme, financial institutions will provide financing of up to RM10 billion, which the government will support by guaranteeing 30% or RM3 billion of that. The scheme only applies to the purchase of properties priced not more than RM500,000.
Under this scheme, the applicant will rent the property for up to five years, and he or she will have the option to buy the house after staying there for a year based on the price fixed at the time the tenancy agreement is signed. The government will also provide stamp duty exemptions on the instruments of transfer between the developer and financial institution, as well as those between financial institutions and the buyer.
The government will also extend the Youth Housing Scheme that is administered by Bank Simpanan Nasional from Jan 1, 2020 to Dec 31, 2021, to assist youths in purchasing their first home. The scheme also offers a 10% loan guarantee through Cagamas to enable borrowers to get full financing and monthly instalment assistance of RM200 for the first two years, limited to the first 10,000 home units.
This article first appeared in The Edge Financial Daily, on Oct 14, 2019