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KUALA LUMPUR: The government has been urged to review the rent-to-own (RTO) scheme announced in Budget 2020 for the purchase of a first home priced up to RM500,000, as it is still considered very high for many prospective buyers.

National Home Buyers Association (HBA) secretary-general Datuk Chang Kim Loong said although it was seen as a proactive step towards opening door for more people to own a home, it would be appropriate if the government to lower the threshold of RM500,000 to RM300,000.

“The HBA fully supports the government’s decision to introduce the RTO, but it is best to lower the threshold to increase the number of buyers who will be able to buy the house that they are renting.

“For example, if the price of a house is around RM500,000, the number of people who can afford to rent it is around 20,000. But if the price is lowered to RM300,000, the number of tenants who can afford it can increase to about 33,333 people and this benefit both the government and developers,” he told Bernama.

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Finance Minister Lim Guan Eng, during the tabling of Budget 2020 on Friday, said the government would work with the financial institutions to implement RTOs to help those who are unable to afford the initial 10 per cent deposit and access to financing in purchasing their homes.

Through this scheme, for purchase of first home up to RM500,000 property price, financing of up to RM10 billion will be provided by the financial institutions with the support from the government via a 30 per cent or RM3 billion guarantee.

Under this scheme, the applicant 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 the tenancy agreement is signed.

Chang said with the lower threshold and the RM10 billion in funding, he expected that developers would see the need to build more affordable housing projects due to an increased number of prospective buyers.

Meanwhile, Real Estate and Housing Developers’ Association (Rehda) president Datuk Soam Heng Choon also expressed his support for the government’s effort to introduce RTOs, which was seen to play a role in improving home ownership among the people, in line with the national housing agenda.

On the extension of the youth housing scheme, Soam said it would benefit young people looking to purchase a home, but hoped the limit for 10,000 units would be increased to benefit more buyers, especially those in the lower income group (B40). – Bernama