PETALING JAYA: Khazanah Research Institute (KRI) director of research Dr Suraya Ismail (pix) has urged the government to reconsider the property crowdfunding scheme under the peer-to-peer financing framework.
“It’s an investment scheme. There’s nothing to suggest that it’s a home ownership scheme because you don’t get the sale and purchase agreement,“ she told reporters at Rehda’s Budget Commentary 2019 today.
“Some people say it is a rent-to-own (RTO) scheme. But even if it’;s RTO, first you co-own with local council. It makes so much sense for them to ensure that you won’t be disadvantaged because the lost opportunity cost is that you are homeless and therefore local council still have to take care of you. You co-own or have mortgage with bank, that’s the normal way we do it,“ she said.
However, under the peer to peer framework, the buyer would have to co-own with a number of investors who are seeking capital appreciation.
“It’s not something that will increase home ownership. It will only increase house prices because what they want is for it to appreciate,“ she added.
Suraya said rapid house price escalation is a strong possibility if the scheme is implemented.
Meanwhile, Rehda Institute chairman Datuk Jeffrey Ng said buyers under the scheme will face problems in coming up with the 20% downpayment required.
“As it is today, a 10% downpayment is already a huge hindrance to home purchase for most first time buyers and as such, will the target group be able to meaningfully participate in the scheme?” he questioned.
He added that the scheme requires a more balanced risk versus benefit treatment between house buyers and investors.
“At the end of five years, the participant will have to either sell, top up the 20% value according to a market value or refinance the house to fund the other 80%.
“Home owners may lose their down payment in the event of a market downturn but will not gain if capital appreciation is not more than 20% over the next five years,“ he said.
However, investors will get 100% of the first 20% gain upside and will not lose in the event of 20% depreciation in value.
