Rent-To-Own Concept for the Low-Income Group

Mangalesri ChandrasekaranJuly 19, 2016


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 any downpayment.

According to the Second Finance Minister Datuk Johari Ghani, a person with the earnings 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 instalment of a house without any downpayment.

When their income increases, they can opt to purchase the property. They can pay more if their salary increases, and if they decide to acquire the property, then they will be required to pay a higher instalment.

“If their salary is increased to RM6,000, their instalment will be increased to RM2,000,” he added.

When they rent a property for 10 to 15 years and decide to buy the property later, they only have to pay the remaining balance after deducting the total rental amount paid for all those years. But the price of the property will only be determined when the renter decides to purchase the property.

To make this plan a success, the federal government, state government and other authorities will have to work hand-in-hand, and allocate land to build abodes for the group. The state government has to make sure that 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.


Mangalesri Chandrasekaran, Editor at PropertyGuru, edited this story. To contact her about this or other stories email


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