LETTER: In addressing the issue of housing affordability and ownership among youth in the low-income group (B40), one avenue to explore is the implementation of the Rent-to-Own (RTO) scheme for affordable housing units.
Anecdotal evidence has shown that it will become harder for youth to purchase homes amid this challenging time when employability is uncertain for new entrants in the labour market. Therefore, they are at risk of not earning stable and sufficient incomes.
There was a positive first signal in May, after the announcement made by Federal Territories Minister Tan Sri Annuar Musa, about the government considering a Rent-then-Own scheme for B40 youth in Kuala Lumpur who are civil servants, or running their own businesses but cannot afford to own homes.
Under the proposed scheme, over 1,000 housing units will be rented out for RM800 to RM850 per month, while affordable houses priced less than RM200,000 are built. Once the housing projects are completed, the rental payments could be used to pay for the deposit of the new houses or used as rebates.
Perhaps the same scheme can be implemented in other states too. Instead of going through the difficulties of trying to buy a house, they can be given the option to rent first, while saving money to buy the house in the future. Under the RTO scheme, B40 youth who are first-time house buyers should be given the assistance to rent houses at affordable rates for a few years, allowing them to purchase the house at the end of the rental period or when they are able to secure mortgage loans from banks.
Through this scheme, the attraction seems to be that the entry cost is low, because the tenants do not need to pay for the 10 per cent down payment. The government, alongside financial institutions and property developers, should collaborate to try to cater to this group's needs in the most effective and coordinated way.
This move should be welcomed, as it could help address the worries in relation to difficulties in getting loans and insufficient money to pay for the 10 per cent down payment. It could also help solve the issue of property overhang in the country which involves affordable homes priced at RM200,000-RM300,000, accounting for 43 per cent of the total in the first half of 2019, according to the Valuation and Property Services Department.
This measure can be applied in conjunction with the Housing Integrated Data System (HIDS), whereby buyers can select their preferred location and type of house which suit their incomes, expected to be ready by next year. With this convenience, underprivileged youth can be prioritised in the allocation process of affordable housing units. If they are still unable to afford the house, they can be directed to the RTO scheme.
Although the Home Ownership Campaign (HOC) has been lauded by the public due to its incentives, the RTO scheme could be another boost to help youth afford their own home, as some are still constrained due to the issue of affordability, job stability, commitments and high house prices, based on a survey conducted by City & Country.
Considering youth are likely to be part of the B40 group who are found to allocate the highest share of their expenditure on housing – 25.6 per cent – and income growth tends to not keep up with the growth in house prices, the issue of housing affordability should be addressed.
With that being said, the rental market should be strengthened further to become a viable option for youth who are financially burdened in the short term. Hence, an RTO scheme should be one of the action plans to be looked into.
SOFEA AZAHAR
EMIR Research
Kuala Lumpur
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times