Knight Frank: Be stringent in evaluating borrowers
MD: Crowdfunding platforms may fuel lenient lending policies
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.