Governance within rental market, MM2H need review

by S BIRRUNTHA / pic by HUSSEIN SHAHARUDDIN 

IPROPERTY.COM.MY has urged the government to enhance governance within the rental property market under Budget 2022, as many Malaysians participate in renting property.

Its GM Shylendra Nathan said this is needed at least until they have accumulated the necessary funds to purchase their own home.

He added that as more people grow accustomed to the work-from-home trend, renting could be seen as an attractive option for individuals to save on accommodation costs in the short term.

“To enhance governance within the rental market, we propose the government set up a digital framework for PropTech (property technology) firms to develop a comprehensive online system that can help modernise the rental application, management and payment processes.

“For example, a Tenancy Agreement that can be executed and stamped online will reduce common pain points associated with renting property and reduce landlord-tenant disputes,” he said in a statement yesterday.

Nathan also proposed for the government to set up a committee to look into the efficacy of commission-based jobs within the past two years and develop ways to mitigate potential issues in the future.

He noted that tying back to the property market, commission-based jobs also comprise real estate agents. He also cited that roughly 25,000 licensed property agents were affected during the start of the Movement Control Order, according to the Malaysian Institute of Estate Agents.

“Therefore, we will welcome any effort by the government towards assisting property agents as they will play an essential role in spurring economic recovery when consumer spending revives.”

Meanwhile, Nathan highlighted that the government must remain consistent when announcing revisions to the Malaysia My Second Home (MM2H) policy.

He said this will safeguard Malaysia’s reputation as a viable second home to foreign homebuyers and bolster foreign homebuyer interest in the local property market in the long run.

Furthermore, he said as Malaysia transitions to an endemic phase by the end of October, the MM2H programme will play a significant role in enabling a better economy after two years impacted by the global Covid-19 pandemic.

“As such, we propose that the government continue looking into improving the MM2H programme to make it more attractive in terms of eligibility and home-buying criteria for future participants, and it should be done progressively over a period of time.

“The current requirements include having a minimum of RM1 million in fixed deposit, compared to the much lower RM150,000 previously, and proof of liquid assets of a minimum of RM1.5 million, compared to at least RM350,000 previously.

“This may dampen foreign interest in coming to Malaysia. By revising the eligibility criteria progressively, we hope to see revived foreign interest in the Malaysian property market,” he added.

On that note, Nathan called for the streamline of the MM2H application process to make it more convenient and accessible to potential participants.

He said addressing any application pain points will encourage genuine participants to see through their application process and secure foreign homebuyer confidence in Malaysia.

He emphasised that even though the programme only encompasses a relatively small segment of the total homebuyers in Malaysia, it remains an essential driver for foreign buyer demand.

Additionally, he said a more significant inflow of foreign direct investment into the country’s economy can trickle down and help support local businesses affected by Covid-19.

In terms of facilitating a conducive environment for first-time home buyers, Nathan said the government should introduce a targeted first-time home buyer initiative for affordable homeownership to address the current financial issues faced by various demographics within this buyer group.

“For example, the self-employed might find it difficult to have the proper documents to apply for a home loan and they may not be able to take advantage of existing schemes like the Home Ownership Campaign.

“A facilitative financing scheme for this group might help in getting them a loan approval and achieving their first home.”

Nathan also suggested the government streamline the application process for home financing facilities — such as the Rent-to-Own Scheme, Youth Housing Scheme, Fund for Affordable Homes and First House Deposit Financing Scheme — to further lower the barrier of entry for first-time home buyers.

“Various schemes have been introduced in the past few years, but some of the websites have outdated or confusing information; some schemes even have a few different sites each.

“Placing these schemes under one roof will encourage consumers to select the best scheme that will fit their needs and requirements, thus smoothening the application and approval process.”

To encourage renters who wish to transition to being homeowners, Nathan said the government can introduce a framework that will allow financial institutions to recognise rental history as a supplementary reference when reviewing an applicant’s loan.

He said implementing this framework will give applicants an extra boost to increase their chances of securing home loan approvals.