FundMyHome scheme a risk for house buyers, experts say

PETALING JAYA: Property experts have expressed scepticism and concern over the recently launched FundMyHome scheme for house buyers, saying it is too good to be true.

Chartered property surveyor Ernest Cheong said the scheme, which was launched last Sunday, was misconceived and would not benefit the people.

On the contrary, he said, it would only get them in trouble in five years’ time.

Under the scheme by EdgeProp, there is no monthly repayment. Instead, after a commitment period of five years, buyers can either sell the home, buy out the remaining portion of the property not owned by them at market price, or refinance the home, either via FundMyHome or a normal bank mortgage.

The scheme requires homebuyers to come up with 20% of the property price which will be placed in a trust account and used to pay off the 5% annual investment return to the participating institutions for a five-year period.

The balance of 80% will be contributed by participating financial institutions such as Maybank and CIMB.

Cheong equated the scheme to that of a typical sale and purchase agreement (SPA) but with more dire consequences if the buyer fails to pay up the remaining portion at the end of the five-year period.

“SPAs have a condition that the agreement can be cancelled if you fail to obtain a bank loan and you can get your money back. But with the FundMyHome scheme, buyers risk losing their 20% and the house if they cannot deliver the balance after five years.

“You have occupational right but not ownership right. Like paying advance rent. There is no recourse because it is a risk that you have to take. It’s a very dangerous scheme,” he told FMT.

He added that this was even more risky given the economic situation in the country as he feared the arrival of a recession.

He voiced surprise that Finance Minister Lim Guan Eng was supporting the scheme in view of the risk it posed to the public.

He also suggested an alternative to the government if the main reason behind the FundMyHome scheme was to honour Pakatan Harapan’s election promise of building one million affordable housing units.

“If you release all the reserve land or repossess abandoned houses through the Land Acquisition Act 1960, developers can save on land costs as all they need to incur is the building cost.

“Build high-rises, not terraces. For 500 sq ft per unit, they can sell for between RM150,000 and RM200,000. I am sure the people can afford it. Don’t ask them to pay RM500,000 and say it’s affordable.”

Are properties really worth their price tags?

Meanwhile, a developer who declined to be named said it was unlikely that developers would settle for collecting just 80% of the price for a home and not knowing if they would receive the remaining 20% after five years.

He said there was no guarantee that the property would increase in value in that time.

In a conventional loan, developers receive the full amount of the selling price with the buyer instead of owing the bank.

“Which developer is happy to collect only 80% of the money they should get? I will only be willing to collect 80% of the price of a home if I am ready to disregard the remaining 20%.

“If the developers are happy to just collect 80% then I guess it’s all good, but I don’t think developers are so generous. Let’s not kid ourselves,” he said.

He also questioned if properties listed under the FundMyHome scheme were really worth their price tags as the price of a property could have been increased up to RM1 million when its actual worth is only RM800,000.

He said if this was the case, even if the developer received 80% of the price of the home, they would be “safe”.

“So was it worth RM1 million to begin with? If it’s worth RM800,000 then the buyer has overpaid for the false comfort of not having to pay any instalments for five years,” he said.

When asked if the reason behind such initiatives was to help developers sell off unsold homes, he said it was unlikely that the developers listed under the FundMyHome scheme were cash-strapped.

He said the FundMyHome scheme could be a good scheme as more money would be drawn from outside of banking resources but added that this would only work if the properties were not overpriced.

Source: FMT