New Rent-to-Own Scheme Model to Improve Housing Access
A new rent-to-own (RTO) scheme will soon be rolled out in Malaysia, designed to provide a more flexible and affordable path to homeownership. According to the 13th Malaysia Plan (13MP), the updated RTO model is targeted at helping households that lack upfront deposits or do not qualify for commercial financing.
The government is also exploring the formation of a housing consortium to ensure better governance, management, and long-term sustainability of RTO offerings.
How the RTO Scheme Works
The RTO scheme allows individuals to rent a property first, with the option to purchase later, following the Islamic financing principle of ijarah (lease). This structure is aimed at households that cannot afford the standard 10% deposit required for home purchases.
At the end of the rental period, tenants are given the option to buy the property at an agreed price. This system helps bridge the gap between renting and owning, while giving families time to strengthen their financial position.
Affordable Homes Target
The RTO initiative is a central part of the government’s housing reforms to deliver one million affordable homes over the next decade. Currently, RTO schemes are being facilitated in collaboration with banks and financial institutions for properties priced up to RM500,000—a segment highly relevant to the kl property market, where first-time buyers often face affordability challenges.
Enhancements to Financing Schemes
Beyond RTO, the government plans to improve existing affordable housing financing options, including:
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Phased interest rate structures to ease repayment pressure in the early years
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Extended financing tenures to make monthly instalments more manageable
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Special schemes for first-time buyers, particularly in high-demand urban centres like Kuala Lumpur
These adjustments aim to widen access and reduce barriers for individuals struggling with traditional bank financing.
Housing for an Ageing Population
Recognising Malaysia’s demographic shift, the government will also introduce long-term financing and rental schemes for senior citizens. This initiative is designed to give retirees stable housing options without the burden of large upfront costs.
At the same time, the introduction of a Residential Tenancy Act will provide clearer legal protection for both tenants and homeowners, reducing disputes and improving rental market transparency.
Implications for KL Property Market
For the kl property market, the expansion of RTO schemes offers new opportunities for both developers and buyers. Developers gain a larger buyer pool for affordable and mid-range units, while households gain access to prime urban housing without being locked out by deposit requirements.
This could increase absorption rates for properties priced below RM500,000 in Kuala Lumpur and Greater Klang Valley, particularly in high-rise projects and integrated townships. Investors may also find opportunities as demand for RTO-friendly developments grows.
Final Thoughts
The expanded RTO scheme under 13MP represents a significant policy shift toward inclusivity in housing. By combining innovative financing with better governance and long-term planning, the initiative opens new doors for thousands of Malaysians—particularly young families, first-time buyers, and senior citizens—to secure homes.
For the kl property market, this move is expected to support sustainable demand for affordable homes while aligning with Malaysia’s broader goal of balanced and equitable urban growth.
