The Rent-to-Own (RTO) concept was recently suggested by the Finance Ministry to help the low-income group to acquire their first home. This approach will be very efficient in allowing low-income citizens to acquire a home without having to pay down payment.
According to the Second Finance Minister Datuk Johari Ghani, a person with the earning of RM2,500 and below should be able to pay a monthly rental of up to RM800. This monthly payment will be taken as the installment for a house without any down payment.
When their income increases, they can opt to purchase the property. They can pay more given their salary is increased and if they decide to acquire the property, then they would be required to pay a higher installment.
“If their salary is increased to RM6,000, their installment will be increased to RM2,000,” he added.
When they rented a property for 10 to 15 years and decide to buy the property later on, they only have to pay the remaining balance after deducting with the total rental amount paid for all these years. But the price of the property will be determined later when the renter decided to purchase the property.
To make this plan successful, the federal government, state government and other authorities would have to work hand in hand, and allocate land to build abodes for the group. The state government has to make sure a certain percentage of lands are allocated and gazetted for the well-being of the lower income group.
“When the land is allocated by the state government, the federal government will play its role to build the houses. Since such projects will be undertaken for a social agenda, talks about the land values will be unnecessary,” he noted.