Knight Frank: Be strin­gent in eval­u­at­ing bor­row­ers

MD: Crowd­fund­ing plat­forms may fuel le­nient lend­ing poli­cies

The Star Malaysia - StarBiz - - News - By EU­GENE MAHALINGAM eu­genicz@thes­tar.com.my

PE­TAL­ING JAYA: The gov­ern­ment’s in­tro­duc­tion of crowd­fund­ing plat­forms as an al­ter­na­tive home fi­nanc­ing so­lu­tion to banks, while laud­able, could fuel le­nient lend­ing poli­cies that could lead to po­ten­tial sub­prime woes.

Knight Frank Malaysia man­ag­ing direc­tor Sarku­nan Subrama­niam said the in­no­va­tive crowd­fund­ing plat­form would make prop­erty more ac­ces­si­ble for first time house buy­ers that may not qual­ify for bank loans.

Here, he said a les­son needed to be drawn from the United States where house buy­ers with in­ad­e­quate fi­nan­cial ca­pac­i­ties were able to se­cure mort­gages.

“There­fore, we urge the Se­cu­ri­ties Com­mis­sion to en­sure fund man­agers are strin­gent in eval­u­at­ing the pro­files of bor­row­ers in the en­tire ecosys­tem of prop­erty crowd­fund­ing plat­forms,” Sarku­nan said in a state­ment yes­ter­day.

“There is also a need to pre­vent fund man­agers who may be tempted to quickly build a port­fo­lio by lend­ing to peo­ple with com­pro­mised cred­i­bil­ity, pos­si­bly dis­rupt­ing the prop­erty crowd­fund­ing plat­forms.”

Sub­se­quently, he said the funds’ port­fo­lios would need to be re­viewed reg­u­larly to en­sure that the in­vestors’ in­vest­ments are se­cured.

The crowd­fund­ing plat­form was an­nounced by Fi­nance Min­is­ter Lim Guan Eng dur­ing Bud­get 2019, with the aim of help­ing Malaysians who have been strug­gling to pur­chase their first prop­erty via peer-to-peer money lend­ing.

Last Sun­day, Prime Min­is­ter Tun Dr Ma­hathir Mo­hamad launched FundMyHome, the first pri­vate-driven crowd­fund­ing plat­form.

Ke­nanga Re­search, in a re­port, said the new crowd­fund­ing plat­form could be a “swing-fac­tor” for the sec­tor, de­pend­ing on how ex­ten­sive the scheme would be, adding that more de­tails are re­quired be­fore any­one could de­ter­mine its ef­fi­cacy.

“For starters, if the re­turns gen­er­ated from the peer-to-peer lend­ing are sup­posed to come from cap­i­tal ap­pre­ci­a­tion, which is ex­tremely chal­leng­ing given cur­rent mar­ket con­di­tions, would there be enough in­vestors?”

May­bank In­vest­ment Bank (May­bank IB) Re­search de­scribed the plat­form as a “game-changer.”

“In our view, the new plat­form would help the de­vel­op­ers to achieve bet­ter prop­erty sales and re­duce their un­sold prop­er­ties by low­er­ing the up­front fi­nan­cial bur­den of buy­ers.

“Sales should be fur­ther boosted by the Home Own­er­ship Cam­paign which will be launched in Jan­uary 2019.”

Sep­a­rately, Sarku­nan said the var­i­ous prop­erty-re­lated Bud­get 2019 mea­sures were well-rounded.

“The ex­emp­tions and ini­tia­tives, in par­tic­u­lar the waiver of stamp duty on the in­stru­ment of trans­fer and loan agree­ment for res­i­den­tial homes val­ued up to RM300,000 for a two-year pe­riod and the six-month waiver of stamp duty charges for prop­er­ties priced from RM300,001 to RM1mil, are ex­pected to kick start the hous­ing mar­ket mov­ing into 2019 and be­yond.

“The de­vel­op­ments tabled in bud­get 2019 will cre­ate tremen­dous op­por­tu­ni­ties for Se­lan­gor as the strate­gic blend of ports, free trade zones, aero­space hubs and air­ports can trans­form the state into a lo­gis­tics hub in the re­gion. Also, the mea­sures pro­posed to em­brace In­dus­trial 4.0 will al­low Malaysia’s man­u­fac­tur­ing sec­tor to re­main com­pet­i­tive by mov­ing their op­er­a­tions up the value chain.”

Se­cure in­vest­ment: Sarku­nan says funds’ port­fo­lios must be re­viewed reg­u­larly.

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