State mulling rent-to-own scheme for Penangites


Penang CM wants to enable more Penang folk to have a roof over their heads. He feels that fresh graduates may not be able to afford a home as their incomes are not growing in proportion with housing prices. Hence, while the current low-cost and low-medium-cost housing schemes will still carry on, the state is also mulling rent-to-own schemes.

“Even for units that are priced at RM42,000 or RM72,000, many are still unable to own a home in this category. Securing a bank loan has been a problem in recent years, so we are thinking of this segment of people who can’t afford to purchase even a low-cost or low-medium-cost unit. We hope the rent-to-own concept would be able to fulfil the needs of this category of people.

“We will convert some existing affordable housing schemes into rent-to-own schemes as some of these projects are ongoing and we have yet to allocate the units to buyers. Once we start allocating the units, we can offer this scheme instead of outright purchase. This will also help us to reduce the holding cost of the units. We may work with private developers to sell the units they have built to the state government at cost price and the state government can then allocate these units as part of a rent-to-own scheme,” he shares.

Chow also sees the need for a paradigm shift in the idea of homeownership.

“We have been inculcated with the idea of home democracy where everyone should own a home. But if we are talking about having a roof over our heads for our family, then we need to do some rethinking — can we achieve that through rental?

“Especially for the young working group with income levels at the starting level, maybe they can have a roof over their heads through the rental market,” he suggests.

However, he notes that there is one thing preventing the implementation of rent-to-own schemes — rental defaulters, which is an issue even for rental units that are only costing RM100 per month.

“I am sure you read about the execution of a recent eviction that we carried out recently. Even at RM100, they cannot afford to pay or they don’t want to pay for whatever reason. This is a challenge for the authorities if people cannot or do not fulfill this basic responsibility. Probably, there is no sense of ownership. They keep paying their rent and in the end they get nothing. But if the unit is tied to ownership, this rent-to-own [scheme] may encourage them to pay the rent which they can consider as installment as eventually, they will own the house. Hopefully, this will change the equation as to why people default on rent,” he says.

Source: EdgeProp.my


  1. zzh
    July 12th, 2018 at 16:28 | #1

    Very encouraging news indeed. I think to do that in a sustainable and sensible scale Penang needs experient foreign group to join hands together. Vanke China ?

  2. ==
    July 12th, 2018 at 17:50 | #2

    U think nowadays youngster will drive proton? same situation u thik they will interested with low cost flat?

  3. miso-gigolo
    July 12th, 2018 at 18:32 | #3

    First and foremost, I like YAB Chow, compared to LGE. Be it the face or the attitude, I really feel the sincerity in YAB Chow. BUT, let’s be clear with our objective, and not confused ourselves. When this article starts with “Penang CM feeling fresh graduates not able to afford housing due to escalating prices” in the first paragraph and goes on in the second paragraph with ““Even for units that are priced at RM42,000 or RM72,000, many are still unable to own a home in this category”, I have a feeling they are confused. Graduates have very high social mobility, and therefore you should not associate them with RM42k or RM72k homes.

    They surely won’t be able to afford a “proper” house when they first started out, but after gaining work experience and a few promotions, by then, they should be able to. Why? Simply because the fundamental of property prices is shaped by the income of the majority of working class. If the price is still high when no one can afford to buy, that shows there is a problem with the system that allows “hoarding” without “penalty”. I have no room to explain to much here, but go read about why Spore fined Uber-Grab because of their recent price increase which carries a monopolistic element that is illegal in Spore.

    The bottom line is, when it comes to necessity items (like basic housing), you can’t allow the few capitalists to corner the market and profit from it. Luxury items is a different story.

  4. Ding
    July 13th, 2018 at 12:23 | #4

    Yeah, Penang youngsters are very affluent and certainly don’t need low cost flats at all. Stop the developments over the island !

  5. kamkai
    July 13th, 2018 at 13:37 | #5


    I agree with you. Most graduates should be able to afford RM400k condo-type affordable housing when they go into their late twenties or early thirties. So maybe rent-to-own scheme should be extended to this type of housing too, therefore enabling fresh graduates to pay rent first, and then gradually own those units which are suppose to be freely traded in the open market, enabling them to further upgrade themselves to more luxurious properties when they are more established in their careers.

    Whereas for those in the 42-72k category, a different approach is needed.

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