Dabbling with RTO

A number of government agencies and private developers have already introduced variants of the Rent-To-Own (RTO) concept to facilitate easier home ownership.

Among them are PR1MA’s RTO scheme; the Smart Sewa Programme by the Selangor state government; and Programme Sewa-Beli introduced by the Johor state government last year.

The Smart Sewa Programme is a rental scheme aimed at low-income earners but the homes are not for sale.

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“It’s a rental programme that provides city dwellers with temporary roofs over their heads for a set monthly rent. Part of their rental sum will be put aside as savings to help them in their future home purchase,” says a state government officer.

The rental tenure is between two and three years. When the rental matures, the savings will be returned to the tenant and they must move out regardless of whether they have plans to buy a house,” she explains.

However, the other two authorities declined to comment on the progress of their RTO schemes.

Developers’ efforts

On the private sector front, there are some property development companies that provide RTO-like schemes.

They include TAHPS Group Bhd’s “Stay and Own” scheme, Selangor Dredging Bhd (SDB) “Reside and Purchase” (RAP) programme and Khoo Soon Lee Realty Sdn Bhd’s “Rent Now Buy Later” programme.

SDB tells that 46 customers participated in its RAP programme which was launched mid-February last year, involving three of its selected completed developments — Windows on the Park in Cheras, By The Sea in Penang as well as Laman & Bayu in Puchong, Selangor.

The 36-month programme enables buyers to move into their chosen unit upon paying 5% of the down payment.

“Some of the unit owners are in the midst of confirming their loans to fully own the property while a majority are still under the three-year RAP tenure. The 36-month period allows them to have more time to secure a loan for the property purchase,” says a company spokesperson.

Moving forward, SDB is looking at refining the programme and plans to roll out a similar scheme soon.

“The government could encourage this method of easier ownership by encouraging banks to fund such schemes with a special loan package, making it more attractive to developers to promote such schemes such as the RAP programme,” adds the spokesperson.

TAHPS which has introduced its “Stay and Own” scheme in January has seen one customer take up the offer while several more are considering.

Eugene Khoo

According to its group CEO Eugene Khoo, under this scheme, the buyer could move into the house after paying a one-month rental plus three months’ deposit.

“The benefit to buyers is they do not need to fork out a large lump sum of money to purchase the unit as the scheme allows the purchaser to rent the property for 24 months and subsequently purchase the property at today’s price. The rental is used to offset the purchase price of the property,” he notes.

Besides the advantage of being able to lock in the price, the buyer could also enjoy appreciation on the property price while building up credit score to secure a housing loan.

Currently, the “Stay and Own” scheme is offered to buyers of TAHPS’ Foreston semidees and linked bungalows as well as the Epic Residence serviced apartments

The tenancy tenure is for a minimum of 24 months and the monthly rental for Foreston is RM10,000 and RM3,000 for Epic Residence.

Meanwhile, Khoo Soon Lee Realty, a wholly-owned subsidiary of KSL Holdings Bhd has recently unveiled its “Rent Now Buy Later” programme on Oct 3, for its Bandar Bestari development in Klang, Selangor.

The programme allows a prospective buyer to rent a home at a set monthly sum for a period of 12 months. The rental sum can then be converted into the home deposit.

Company project director Patrick Khoo noted that the company hopes to help potential buyers be more financially prepared besides providing an opportunity for them to take the first step towards property ownership.

“It creates a win-win situation for all parties involved with the aim of increasing home ownership by the year 2020,” he said in a press statement recently.

“At this point of time, we are not sure how long the initiative will continue, but if it helps people and make it easier for them to obtain a property, we may just consider offering this concept for the long term,” he said.

For now, KSL’s “Rent Now Buy Later” programme is applicable to buyers of 107 2- and 3-storey semidees (Clermont, Argentine and Prevenche) at its Canary Garden development in Klang with built-ups from 3,400 sq ft to 5,000 sq ft and at prices from RM1.5 million.

This story first appeared in pullout on Nov 3, 2017. Download pullout here for free.

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