13MP: Govt to introduce new rent-to-own scheme model to boost homeownership

• According to the 13th Malaysia Plan report released on Thursday, the government will also explore the establishment of a housing consortium to ensure more efficient and sustainable management of the RTO scheme.

KUALA LUMPUR (July 31): A new rent-to-own (RTO) scheme model will be introduced to offer a more flexible and affordable rental system, aimed at enhancing homeownership opportunities for the rakyat.

According to the 13th Malaysia Plan report released on Thursday, the government will also explore the establishment of a housing consortium to ensure more efficient and sustainable management of the RTO scheme.

“The RTO homeownership method will be expanded to provide opportunities for households that lack upfront deposits and do not qualify for commercial financing,” the report stated.

The RTO initiative is part of broader housing reforms under the government’s plan to deliver one million affordable homes over a 10-year period. It offers an alternative home financing method based on the Islamic concept of ijarah (lease), which allows consumers to rent a property with the option to purchase it at a later stage.

The initiative was first introduced under Budget 2020 to support those unable to afford the 10% deposit required for home purchases, with the government working in collaboration with financial institutions to facilitate RTO schemes for properties priced up to RM500,000.

In addition, the government plans to improve existing affordable housing financing schemes by refining elements such as phased interest rate structures and extended financing tenures, to enable more individuals, particularly first-time buyers, to own homes.

“To prepare for an ageing population, long-term financing or rental schemes for senior citizens will also be introduced,” the report noted. “A Residential Tenancy Act will be enacted to ensure fair protection for both tenants and homeowners.”

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