Rental as a solution for unsold units: CPPS
KUALA LUMPUR: The Centre for Public Policy Studies (CPPS), an independent and non-partisan public policy institute established by the Asian Strategy and Leadership Institute (Asli), has proposed the rental market solution to ease the high number of unsold residential units and the overhang of properties in the country.
Strengthening the rental market can also provide a sustainable longterm alternative to home ownership until the buyer is financially ready.
CPPS senior director Lau Zheng Zhou said renting can be a safety net and a way to bridge the gap between moving out and owning a home of one’s own.
“Instead of increasing government spending on more affordable housing, perhaps we can steer our direction towards renting, or rent-to-own so that we can absorb these unsold units. Unsold units are also losses in terms of income potential, therefore it’s a win-win situation for both government and property players to have a strong rental market,” Lau said at Asli’s industry-government open dialogue here recently.
Citing data from the National Property Information Centre, he said there is a year-on-year increase of 15,506 fully constructed unsold residential units in Malaysia from 2017 to 2018 and 83% of the unsold residential units are valued above RM250,000.
“This goes to show the extend of mismatch between demand and supply and the issue seems to worsen,” Lau said.
The first quarter of 2018 saw 146,196 unsold constructed and completed housing units, 12% higher than 130,690 unsold units in the first quarter of 2017.
“When it comes to housing, we seem to think that the solution lies in building more affordable houses. Our ultimate policy goal seems to be one that seeks to increase house ownership but are we at risk of missing out on the changing demand and needs of Malaysians, especially the youth?”
He said young Malaysians are much more mobile today than they were in past generations and tend to move around more because of the changing environment. For example, the rise of the gig economy leads to more frequent relocations for jobs. People who are Grab drivers, freelancers, start-ups, or simply enjoying having shortterm assignments abroad and need the freedom to be able to move around without being tied down with fixed assets. The incidence of late marriages is also on the rise, which means one tends to defer decision to buy a house.
“It’s a strong rental market solution. How do we make renting a safety net for this segment of the population until they are ready to own a house of their own?”
First, CPPS recommended a new rental act, as existing laws related to the renting of properties are too general, vague and outdated. Second, it recommended a centralised public agency to take care of the residential rental market, and to safeguard house owners and tenants. Third, it recommended that tax imposed on rent revenue be lowered for private developers who provide residential houses renting.