Now, Rehda sounds caution over FundMyHome

RM220 billion needed to fund the project over the next 10 years

(FMT) – The country’s main body representing the property industry has repeated concerns from many quarters over the recently launched FundMyHome scheme, including over whether it is suitably tailored for its target group.

The Real Estate and Housing Developers’ Association (Rehda) said while the crowdfunding scheme was similar to a property-investment scheme, the essence of such a plan should be affordability for first-time house buyers.

“The question remains if the target groups will be able to meaningfully participate,” said Rehda chairman Jeffrey Ng when opening a discussion on the 2019 Budget at Wisma Rehda here.

Saying the requirement for a 20% downpayment was impossible given that the present 10% payment was already a “huge hindrance”, Ng asked if the M40 (middle 40) and B40 (bottom 40) income groups could benefit from the scheme.

He also warned of the unpredictable property market in the next five years, adding that home owners could risk losing their 20% downpayment.

Under the FundMyHome scheme, buyers pay 20% of the property price which will then be placed in a trust account to pay off the 5% annual investment return to the participating institutions for a five-year period.

The balance of 80% will be contributed by participating banks.

There is no monthly repayment for the first five years, after which buyers either sell the home, buy out the remaining portion of the property not owned by them at market price, or refinance the home.

Experts are sceptical of the scheme, and have questioned if it will benefit buyers. The scheme, first announced by Finance Minister Lim Guan Eng, also came under fire from his predecessor Najib Razak who said it was not catered to the poor.

Ng said based on research by Rehda, there was a core group from the B40 category who could not afford to buy homes and could only rent.

“The reality is that they may not even be able to afford to buy at a range lower than RM150,000.”

Ng said he would meet the relevant ministries to propose a Residential Real Estate Investment Trust (Residential REIT), saying this could provide a solution to affordable housing for the poor.

He said under the Residential REITs, the government could provide sites for social or public rental housing in suitable locations in urban centres, and the trusts could build public housing at their own cost.

The REITs would then obtain the right to rental returns from the development for 30 years at prefixed rental rates.

Ng said it was still unclear whether the government would be able to fulfil the promise of building one million affordable homes, a core pledge by both Barisan Nasional and Pakatan Harapan during the election campaign this year.

He also questioned how the current government would find the money to build such high numbers of housing units and where it would find land.

He said according to Rehda’s analysis, the government would need 4,100 acres of land for one million units of high-rise housing.

It also needs some RM220 billion to fund the project over the next 10 years, he said.