Thu Jun 01 2023 03:56:59 GMT+0000 (Coordinated Universal Time)
Rent-to-own or rental-purchase is relatively less known in Malaysia but has been around overseas for decades. The scheme works through a lease agreement that gives you the option to end with a property sale. Those looking to buy a property enter into a lease – which is a contract between the developer and the potential buyer – that dictates a certain length of time the buyer will first rent the home for. For some people, this might be five years, and for others it could be 20. At the end of this contract, you can exercise the option to purchase the property – hence, rent-to-own.
According to Budget 2020, the government will collaborate with financial institutions to introduce a Rent To Own (RTO) financing scheme to assist for the first time buyers those unable to afford the initial 10% deposit and access to financing to buy homes.
Under this scheme, financing of up to RM10 billion will be provided by the financial institutions with the support from the government via a 30% or RM3 billion guarantee. Former Finance Minister Lim Guan Eng, in tabling the 2020 Budget, said the RTO scheme applies to the purchase of first homes, with a property value of up to RM500,000. What this means is, property seekers can rent for 5 years, with the option to buy at the price stated in the rental agreement. Stamp duty is also waived for this scheme.
Types of RTO Schemes Available to Malaysians
Maybank’s HouzKEY home loan not only gives you greater flexibility, but also a more efficient way to manage cash flow — great for young couples and adults looking for their first home.
PR1MA housing projects are generally high in demand due to its affordability and low barrier entry for those looking to buy their first home, so make sure you stay updated with their official page to find out when the next balloting will happen!
Living in Selangor has so many perks, like subsidies for your children, a special higher education fund, free Internet connection (hello, WiFi@SmartSelangor), and the Smart Sewa homeownership scheme that makes independent living a closer reality.
How Do You Qualify for the RTO Scheme?
Depending on which scheme you use (Maybank’s HouzKEY and PR1MA are two of the most popular) there are a few stipulations which interested candidates must meet. These can include being a Malaysian citizen, having the right number of guarantors from your family (i.e., someone who agrees to pay your rent for you if you’re somehow unable to do so), and having a combined household income above a certain amount (usually around RM5,000 and above).
On a side note, before you enter into any rent-to-own agreement, make sure you’ve done your research and have spoken to real estate professionals who can help ensure you get the best value for your family.