Expand rent-to-own scheme nationwide under 2027 budget, says group

 Centre for the Advancement of Community and Housing says flexible housing financing is needed for low- and middle-income Malaysians who struggle to secure bank loans.

The Centre for the Advancement of Community and Housing said many low- and middle-income Malaysians are unable to obtain housing loans because they are self-employed, work in the gig economy, have irregular incomes or do not meet banks’ lending requirements.

PETALING JAYA:

A housing advocacy group has urged the government to expand the rent-to-own (RTO) scheme nationwide under the 2027 budget to help Malaysians who can afford monthly housing payments but struggle to secure bank financing.

In a statement, the Centre for the Advancement of Community and Housing (REACH) said the government should also establish a fund to acquire suitable affordable homes for the scheme and widen financing guarantees for buyers who can afford the payments but do not meet conventional bank requirements.

REACH chief coordinator Iskandar Abdul Samad said the scheme should prioritise B40 and lower M40 households, as well as those with irregular incomes, while ensuring that monthly payments remain genuinely affordable based on household income.

“The goal of national housing policy should not simply be to build more homes. The goal must be to ensure that Malaysians who need homes can actually afford to own them,” said Iskandar, a former Selangor housing, building management and urban settlement executive councillor.

Iskandar said many low- and middle-income Malaysians were unable to obtain housing loans because they were self-employed, worked in the gig economy, had irregular incomes or did not meet banks’ lending requirements.

He said some of these Malaysians could afford to pay RM800 or RM1,000 in monthly rent but were still considered “unbankable” when applying for a housing loan.

He said one possible model would be for the government or a government housing agency to buy suitable affordable homes from developers and offer them under an RTO scheme, with ownership transferred to participants after they complete their payments.

However, Iskandar said project selection must be based on genuine housing needs, suitable locations, reasonable prices and quality rather than allowing developers to use the scheme to dispose of unsold units.

Iskandar said another approach would be for the government to act as a financing guarantor for buyers who can afford the monthly payments but fail to meet conventional bank lending requirements.

Such an approach has already been implemented through the Housing Credit Guarantee Scheme, which was continued and strengthened under Budget 2026 to assist first-time homebuyers, including those without fixed incomes, he said.

The RTO scheme under the People’s Housing Programme was approved by the Cabinet in 2016 to help those who were unable to secure financing from financial institutions. The scheme was still being implemented in Kedah, Kelantan, Penang, Negeri Sembilan, Selangor, Terengganu and Kuala Lumpur as of March.

In August, housing and local government minister Nga Kor Ming said the government would continue exploring RTO, fixed-rate mortgages and other financing instruments to suit changing employment and income patterns.

Nga also said the government would look into a shared ownership model to give Malaysians greater flexibility in financing their homes.

The model, adopted in countries such as the UK, allows buyers to purchase a percentage of a property using a mortgage and deposit while paying subsidised rent on the remaining share. - FMT