During the COVID lockdown, banks counted only half of Sean's income, so he could not qualify for a normal home loan for the new launch he wanted. A salesperson suggested Maybank Islamic's HouzKEY, a rent-to-own scheme in which the bank buys the unit and you rent it from the bank, with the option to convert to financing later.
How does a rent-to-own scheme like HouzKEY work, and is it a good way to buy?
“it would make a lot of sense to convert back into a home financing”
For Sean it was the right choice: it let him secure the unit before prices rose, at rent well below the market and below a normal instalment. Because conversion is at the original SPA price, it pays off if values rise; if they don't, you can keep renting and walk away after five years.
Why
It opens the door when income looks weak
The scheme suits young couples, or anyone whose finances look thin at the time of buying, who expect to be able to afford a loan later.
Conversion is at the original price
You can convert to normal financing from year two to five at the SPA price. Sean's first tower sold at a little over RM700 per sq ft; the last tower at over RM900, so converting locks in that gain.
Rent eases you in
The rent is set in a schedule, lowest in year one. Sean pays far less than the RM2,700 he paid for a rented home nearby, and less than similar furnished units fetch.
There are extra steps
Because the bank was the owner under his version, Sean collected his keys months after other buyers. The scheme has been revised several times, and some later versions make the buyer the owner.
What to do
- Ask the bank which version of the scheme applies, and who is the legal owner.
- Check the rent schedule for each year and the conversion terms.
- Research the project's prospects, since the benefit comes from converting at the old price.
- Keep your finances in order while renting, so you still qualify to convert.
- Compare with subsale prices before converting; if values fell, buying subsale may be cheaper.
Editorial Note: Summarised from Sean Tan's full episode. The quoted answer is in his own words; the rest is our paraphrase. Figures reflect the recording date, so check current rates and rules before acting on them.
WAS HOUZKEY WORTH IT?? | EP 06
Sources & Verification Data
Summarised from Sean's full English captions for this October 2024 video, part of a series on buying his own home. The quoted line is verbatim; everything else is paraphrased. Sean mentions that The Makeover Guys, a renovation company he works with, is fitting out the unit. The rent he pays under the scheme was unclear in the captions and is left out.
