Rent To Own (RTO) Malaysia 2024: An Easy Path to Homeownership 

Dreaming of owning a home in Malaysia but struggling with hefty down payments? The Rent To Own (RTO) scheme, introduced in Budget 2020 and thriving into Budget 2024, might be the key to owning your dream home into reality. This initiative is ideal for young families and individuals with limited incomes, the RTO scheme provides a hassle-free route to having a place to call your own.

Let's delve into the details and explore the ins and outs of Malaysia's RTO landscape.

 

 

What is Rent To Own (RTO)?

Rent to Own, alternatively termed lease option or lease-to-own, is a real estate arrangement enabling tenants to lease a property with the opportunity to buy it at a later date. In Malaysia, this program functions under a defined legal framework, offering a structured avenue towards property ownership.

 

3 Things You Need To Know About Rent To Own (RTO)

How Does Rent To Own Scheme Work?

With RTO, potential buyers enjoy immediate occupancy while paying rent, with the option to purchase the property at a prearranged price within a specified period. This section delves into the financial aspects and contractual responsibilities associated with this arrangement.

Why Choose Rent To Own Over Regular Renting?

While regular renting may suffice for short-term commitments, the Rent To Own option offers a unique pathway to homeownership without the need for a substantial upfront payment.

It's an ideal choice for individuals seeking to call a property their own without the financial burden of saving large sums.

Who Can Join the Rent To Own Scheme?

The Rent To Own (RTO) scheme welcomes all individuals who meet specific criteria, including:

• Malaysian citizenship
• A sufficient number of family guarantors
• A combined household income above the specified threshold (usually around RM5,000 and above)

 

Pros and Cons of Rent To Own Schemes in Malaysia

Pros

1. Path to Homeownership:

Rent to Own offers individuals a structured and accessible route to eventually own the property they are currently renting which the primary objective of Rent To Own (RTO) schemes is to make homeownership accessible to lower-income families.

2. 'Try Before You Buy':

The Rent To Own (RTO) period provides an opportunity which tenants have the opportunity to experience living in the property before committing to purchase, ensuring it meets their expectations. before committing to long-term ownership

3. Fixed Purchase Price:

The purchase price is predetermined at the beginning of the agreement, protecting tenants from potential market price fluctuations.

 

Cons

1. Limited Property Choices:

Rent to Own options might be limited, restricting tenants to a narrower selection of available properties.

2. Risks of Missed Payments or Overpayment:

Long lease periods increase the consequences of missed payments, potentially leading to eviction and debt.

Thus, tenants might end up paying more for the property than its current market value, especially if property values decrease.

3. Market Value Fluctuations:

While locking in a purchase price is a benefit, it can also be a disadvantage if the property’s value decreases during the lease term, buyers are bound by the initially agreed-upon price.

 

Initiatives and Eligibility for Rent To Own in Malaysia

Several Rent To Own (RTO) initiatives cater to diverse needs. Here are three prominent programs:

Maybank HouzKEY:

 

 

• 100% financing with no down payment
• Flexible tenure up to 35 years
• Lowest monthly payment.
• Eligibility for Malaysians aged 18-70 with specific income and guarantor conditions
• The applicant MUST NOT have more than one home financing at the point of application.

PR1MA (1Malaysia Housing Programme):

 

• The applicant must be a Malaysian citizen
• Affordable homes from RM100,000 to RM400,000
• 5-year moratorium on property sale
• Individual or combined household income (husband and wife) between RM2500 and RM15,000 monthly
• Single or married and age 21 and above
• Owns no more than one property between you and your spouse - if any

(etc: Residensi Pr1ma Kota Tinggi, PR1MA Seremban Sentral)

Skim Smart Sewa

 

 

• Rent-to-own for 2 to 5 years
• 30% return of total rental used as a deposit if buying within five years
• Open to Malaysian citizens in Selangor
• The income of the whole family:
  • Not exceeding RM5,000 per month and below for Type A house rental applications or low-cost houses.
  • Not exceeding RM15,000 per month and below with priority given to those with income less than RM10,000 per month for Type B, C & D house rental applicants including medium and medium cost houses.

Rent To Own (RTO) scheme by the Penang government

 

• Malaysian
• Aged 21 years and above on the date of application
  Born in Penang or a resident in Penang which also registered voters in Penang
• The income of the whole family:
  • Husband and wife’s income does not exceed RM2,500: For Affordable House A maximum price of RM42,000
  • Husband and wife’s income does not exceed RM3,500: For Affordable House B, maximum price of RM72,500.00
  • Husband and wife’s income does not exceed RM8,000: For Affordable Housing C1, maximum price of RM150,000
  • Husband and wife’s income does not exceed RM10,000: For Affordable Housing C2, maximum price of RM200,000
  • Husband and wife’s income does not exceed RM12,000: For C3 Affordable Housing, maximum price of RM300,000
    • For the Type A / Type B Affordable Housing application, the applicant and spouse must not own a house in any state in Malaysia; or
    • For the Affordable Housing Type C1, C2 and C3 application, applicants and spouses who own a house priced below the price of the Affordable Housing applied for (provided the previous home ownership is after 2008) are eligible to apply.

 

 

Owning a home in Malaysia has become more accessible than ever with the Rent To Own (RTO) program. This guide aims to empower individuals with the knowledge needed to make informed decisions about their journey to homeownership. Last but not least, you can also seek advice from real estate professionals to ensure the best fit for your financial capabilities and lifestyle. The journey to homeownership in Malaysia just became more accessible. Choose wisely!