PETALING JAYA: National House Buyers Association secretary-general Datuk Chang Kim Loong (pix) opined that property crowdfunding will not be able to significantly contribute towards increasing home ownership for first-time homebuyers.
“The property crowdfunding scheme will be structured as an investment product and will not be suitable for the majority of first-time homebuyers. The scheme will only be suitable for a niche segment of first-time homebuyers who are unable to get access to traditional financing,” he said.
Chang, who concurs with CBRE-WTW managing director Foo Gee Jen, said homebuyers must be fully aware that he/she is not taking on traditional financing and be fully aware of all the terms and conditions before participating in property crowdfunding.
“It must be clearly stated that the property crowdfunding does not confer legal ownership or title to the buyer but only the right to stay in the said property for the next five years (if the tenor is five years). Legal ownership or title will only be conferred or transferred when the buyer pays the remainder of the property price,” Chang said.
Under a normal home ownership scheme, homebuyers know the price to be paid for the property but under property crowdfunding, homebuyers need to pay the balance of the properties’ market price which cannot be determined at the present moment.
“The homebuyer must be reasonably certain that he or she will be able to qualify for a mortgage for the remaining property price based on the expected market price in Year-5 or else, the homebuyer will be in the same position as he or she is in currently, which is unable to buy their first home,” Chang said.
He advised homebuyers to purchase properties that they can afford today instead of waiting for their salary to increase because when their salaries do increase over time, the price of their “dream home” would have also increased further and remain unaffordable.