A national research institute director says the peer-to-peer (P2P) financing scheme for housing announced in Budget 2019 benefits investors more than home owners, and has urged the government to review the scheme thoroughly.

“P2P finance is an investment scheme, there’s nothing to say that it’s an ownership scheme.

“With the scheme, you co-own with a number of investors who actually just want to make a capital appreciation.

“It is not something that will increase home ownership, it is only something that would increase house prices because what they want is for the prices to appreciate,” Suraya Ismail, director of Khazanah Research Institute said after a panel discussion at a Real Estate and Housing Developers’ Association’s (Rehda) Budget 2019 event.

She argued that house prices needed to be affordable first, instead of using financing methods to make houses appear affordable, adding that the P2P scheme proposed by the government “can be improved”.

During the panel discussion earlier, Suraya pointed out that the P2P scheme is the first of its kind, saying: “Never before has the principles of ownership and investment be parked together, and it is as if you can divorce it later. This puts unnecessary risk on the owners.”

Meanwhile, she also said that property purchases for the purpose of asset accumulation, or investment, could not be included when assessing the overall housing market because this would distort the demand.

Finance Minister Lim Guan Eng, in the 2019 Budget announcement had said the government would be approving private sector-driven “property crowdfunding” platforms to serve as an alternative source of financing for first-time house buyers.

The Securities Commission will regulate these platforms under the P2P financing framework.

Under the P2P financing framework, the buyer will be able to acquire a selected property by paying 20% of the price. They will be able to choose from a wide array of high-rise and landed homes of different prices and locations showcased on the website.

The remaining 80% will be borne by potential investors who fund the purchase in exchange for its potential appreciation in value over a particular period of time.

The House Buyers Association (HBA) has criticised the move, saying that it may open up floodgates for scams, unsold properties, and there are uncertainties as to how the mechanism would work.

Source: FMT News