(There is an update to this article. Please click here to read it.)
HouzKEY (Link) is a rent-to-own scheme offered by Maybank. What is a rent-to-own scheme? In this kind of scheme, the tenant rents a home for a certain period, with the option to buy it in the future.
HouzKEY Review
HouzKEY allows its customers to rent a home for at least one year and gives the option to buy the house anytime at the pre-agreed price after the period. During this period, the tenant has to pay a monthly rental. The rental tenure can be extended up to 30 years.
Currently, HouzKEY only lists properties up to RM 1 million around Klang Valley. There are a lot of choices and the monthly rental starts from RM 1380 up to RM 5280. Moreover, HouzKEY also allows the customer to find other properties for the bank’s assessment. Once approved, it will be listed on the website and the customer can proceed with the next step.
Advantages of HouzKEY
The first advantage is its low entry cost. Instead of the conventional 10% down payment plus the transactional costs, you just have to pay three-month rental deposit which is refundable. Thus, you are paying around 2% of the property price as compared to around 15% with a traditional mortgage.
Its second advantage is that you can apply with up to three guarantors to improve your eligibility.
The third benefit is you can keep 100% profit from the sale of the property, if you choose to sell.
Eligibility
You must be a Malaysian citizen between 18 – 65 years old and have maximum one existing home financing only. The household gross income must be at least RM 5000. The scheme allows you to include up to 3 individual guarantors (must be from 18 to 65 years old) if the income criterion cannot be met by your own income alone. They must be your immediate family members (spouse, parents, siblings and children only).
How to start with HouzKEY?
After you have registered with HouzKEY, browse through its list of properties. Pick one that you want to own and follow the instructions. If your application is approved, you will need to pay three-month rental deposit. Bear in mind that though you do not have to pay the upfront costs such as legal fees, stamp duty and memorandum of transfer, these fees are absorbed into the financing amount and will be part of your monthly rental.
The monthly rental is like a mortgage instalment. It helps to reduce principal amount from the total obligation. The rental amount is calculated based on the Bank’s Islamic Base Rate and it might change if the rate changes.
Once you receive the key, you will start to pay the first rental. The rental invoice is issued on the 22nd of every month.
The contract period runs from a minimum of five years up to 30 years.
Tenant’s obligations
Once you receive the house, you need to pay all expenses and charges related to homeownership. These include taxes, takaful, quit rent, maintenance fees, utilities and others.
You also need to liaise with the developer personally if there is defect in the property.
You must maintain the house in a clean, good and tenantable condition, and inform the bank on any works done to repair defects or damages.
Fire insurance is compulsory and is charged as part of the monthly rental.
It is important to appoint a nominee for the house as your account will be terminated at the point of death. To ensure that the nominee can attain ownership, it is advisable to purchase a life insurance to cover the property purchase price.
What happens next?
After 12 months, you have two options.
1. Purchase the house
If you choose to own the house, you can either secure a mortgage or buy it with cash. I guess most people will take the mortgage. But if you are fortunate enough to have that much cash after one year, you can choose the second option. Since the price is locked in, even if the property price appreciates, you are still entitled to the pre-agreed price. You can choose to exercise this option anytime during the 5-year rental period. The rental will stay the same during this period.
2. Sell the house
HouzKEY allows the tenant to sell the house after one year. If there is any profit, you get to keep all of it, provided you settle all the remaining outstanding with Maybank. Nonetheless, you will need to pay Real Property Gains Tax on the profit.
What happens after five years?
You have two extra options in addition to the options above.
1. Continue to rent
You can continue to rent the house. However, the rental will increase by 2% annually and you need to top up security deposit. If you rent for the maximum tenure of 30 years, Maybank will sell the house to you for RM 1 at the end of the period. Nonetheless, this option will cost more in the long run. Thus, if you really want to own the house, you should consider to secure a mortgage after five years.
2. Walk away
You can choose to just terminate the tenancy without any penalty. But why don’t you sell it and gain some money?
Important issues
You are not allowed to transfer ownership during the first year.
If you choose to walk away before the 5-year period expires, you will need to pay the remaining of the minimum rental period.
Conclusion
Overall, HouzKEY represents an interesting alternative way to own a house, especially if you do not have a large sum of money. Nonetheless, the monthly rental can be high due to the absence of down payment. Furthermore, you cannot rent the property out. So, you have to decide if this is a suitable method for you to buy a house.
If you are interested in this programme, check out its website here.
There is another similar scheme known as FundMyHome operated EdgeProp. You can read my review here.
*UPDATE on 12 June 2021:
I have received a comment from Hazri which concurred with what Jo and Ong said regarding the rental being higher than mortgage. Hazri is a HouzKEY buyer, and he said that the rental rate remains the same for the first 5 years but increases gradually every 3 years. I have asked for more information regarding his comparison, so hopefully we will see the full picture soon. Thanks to Hazri for sharing his experience.
(There is an update to this article. Please click here to read it.)
Comments
Hi, thank you for the details and review on Maybank Houzkey Scheme. Was wondering – in your opinon – what are the downside to this scheme?
Thank you.
Author
Hi, Jeremy.
In my opinion, this scheme is meant to help to increase the rate of homeownership. Based on the available information now, I think it does not have any downside.
The obvious downside is the monthly rent is likely to be higher than the mortgage payment, there is no free lunch. Can’t believe the author missed this and said it doesn’t have any downside.
Author
Hi, Jo.
As this scheme does not ask for the large down payment normally required during house purchase (which was mentioned in the conclusion), I do think that the higher rent than mortgage payment is quite justified.
But I do agree that there is no free lunch in the world.
Thanks for taking the time to give your opinion.
how to apply for this?
Author
Hi, Prabakaran.
You have to go to the HouzKEY website and register first. After that, select the property that you are interested and follow the instruction. Do take into account the eligibility criteria before applying.
As a real estate investor, the main benefit includes steady cash flow as a source of income to secure financial free-dom for a long time. Owning a rental property can offer the investors a sense of security because of properties ap-preciation in value.
Get in touch with the real estate agent. We at PROPERTY HUNTER shifted this service to a level much higher than the broker concept. Our highly trained and professional experts team will review and evaluate our client’s needs and requirements.
There are numerous factors affect the real estate market demand and supply, Interest rates, economic growth, de-mographics, mortgage availability and consumer confidence. For investors who have hold their properties for numerous years now can be a good time to sell and take advantage of new opportunities with aggressive payment plans whom has a great growth and return potential. We as expert in the local market will share with you the status of the real estate market and provide the proper advice to achieve your target. We have wide varieties of options of off plan projects and ready residential and commercial properties. Ranging from Apartments; studios, penthouses, townhouses, lands, plots, villas, office spaces, showrooms, hotel apartments and suits, commercial buildings, residential buildings, VIP tow-ers and hotel projects. you can see more details like this article Property for sale Property for Sale in the pearl qatar
Author
Hi, property hunter.
I appreciate your view on owning rental properties. However, I think most of us here are very unlikely to invest in Qatar.
Thanks for the comment anyway.
I am a first time home buyer and interested in houzkey ideas. Can any professionals in real estate suggest whether my choice is a good one?
Thank you.
Author
Hi, Nabila.
Sorry that I could not give you an answer on this issue. Hopefully there will be some professionals leaving an answer for you.
Pingback: Maybank HouzKEY Review Update 2021 | MyFinTalk
This Houzkey scheme gives no benefits to customer at all.
If you don’t have many to pay for downpayment, you need to stay under rental scheme for entire tenure. Rental rate remain for the first 5 years and increase gradually every 3 years. At the end, cummulative rental is much-much higher compared to mortgage.
I am among firast batch Houzkey buyer. I didn’t do proper analysis before I signed the agrement.
Now after I did some calculation, I totally regret and upset on the decision that I made.
Author
Hi, Hazri.
Thanks for your feedback. I have been receiving comments saying the rental is higher than mortgage but could not get further clarification on this. Yours is the first feedback with more detailed information.
I assume that you would not recommend anyone to sign up for HouzKEY then, am I right? Do you mind to share how you compare the mortgage and rental? So I could put your calculation in the article too.
Thanks.
i am here as signed on houzkey at 2020……………..
Hi , first of all MAYBANK did not provide a specific number for us to call with regards to HouzKEY . Besides, i has also made an enquiry via email but no response . So i decided to make it here.
1) What benefits would i get if i decided to buy the house on my 3rd year of renting the house with MAYBANK? Meanwhile, what benefits would i get if i decided to buy it on my final year of rent (5th year)?
2) Within the 5 years of rent, would my renter fees get cheaper each year? (this was once mentioned by one of your staffs , i am here to seek for confirmation/correction )
Thank you in advance.
Author
Hi, Yvonne.
I doubt you would get an answer here from Maybank HouzKEY team. I have tried to use the website contact form to ask some questions but to no avail. I can’t provide answers to both your questions but hopefully the others would be able to answer them.
03-2070 8833 ext 11612
trust me
hi author, good to see you, i rather to speak out loud here than lowyat forum to making an awareness for the folks.
firstly, i signed houzkey on 2020, just got VP on 09/2021, currently living the T brand apartment about 4 months, luckily i have rented out a room for 350.00, ya i know is really cheap.
i choose HK is because i dont have a strong financial at that time, and i really wanted to buy a property for myself. Gracefully, now i am able to buy by myself.
But, the structure is not good, driveway to rooftop parking is narrow than sunway pyramid shopping mall. The cleanliness is a big issue right now, lift is dusty…….
Some of the reasons that i have a mind to cease the max 5 years so called tenure.
Also, i would like to buy E brand apartment 570sq ft for a single like me, much saver on service fee and hosing loan per month.
What i remembered verbally from Maybank KL staff when i face-to-face signed the lease agreement is she said that i can only start decided on the 2nd year for to walk away or to buy down the unit. Yesterday, i did contacted to MB KL staff via m2own@maybank.com.my, their response is exactly the black n white disclosure sheet -https://www.maybank2own.com/portal/modules/proposition/attachments/Product%20Info%20for%20Customer.pdf – i only can walked awayafter te full 5 years.
TOBECONTINUE
since i dumped a lots of queries to HK, now in the mid to wait them give me a better solution.
worst case for me is definitely rent for a full 5 years, then walked away and hopefully can buy E brand unit if i still single. Some more its a partially furnished unit.. I shall already a 36 yo lady at that year. SAD.
or to buy landed house…. but i like swimming or go gym.
If someone nice girl or perhaps couple is looking for room rent, kota kemuning area. Kindly contact me…. 🙁
********************
1) the first year rental supposed is RM 1187.20 but now the BLR rate is lower, i am only need to pay 890.40 per months. Hope the price will not increased every annum until the last 5th year as the agreement written is nearly RM 2000. PUKE BLOOD.
2) this is a 870 sq ft unit, the lease agreement written the “gross value”RM 470800 is just roughly a figure, might be lower than that. If i tend to buy down at 2nd year i will having a incentive RM30600 to deducted, 3rd year – RM28248, 4th year – RM25894, last 5th year – RM18832.
3) someone i browsed at lowyat forum also confessed that is a wrong step to choose HK. but he managed to rent out the unit to stop the bleeding.
FROM MY PRECIOUS EXPERIENCE – U FOLKS BETTER DONT BUY A STILL UNDER CONSTRUCTION HIGH RISE BUILDING. TURN OUT MIGHT REGRET LIKE US.
Author
Hi, Alice.
Thanks for sharing your experience here. It seems like HouzKEY would not be a good choice based on your experience. So, if you could repeat the process, would you still choose HouzKEY or you would wait for a few years to save more money for down payment?
Do you mind to explain to me what are T brand and E brand apartments as I am not familiar with those terms? Thanks.