KUALA LUMPUR: A word of caution for Malaysians who are renting a place because they cannot afford to buy their own home. Make sure your rent does not eat up a huge chunk of your salary.
“The lifestyle you want sometimes dictates what you are willing to pay,” said Khazanah Research Institute’s research director Dr Suraya Ismail.
Tenants, she said, should not fork out 30% or more of their monthly income on rent.
That 30% rate is typically what one would pay to own a home, so when it comes to renting “it shouldn’t be 30% or above”.
“Let’s say two-thirds of 30% of your income goes towards paying rent. Make sure that you put the other one-third into a unit trust or some financial instrument which gives you returns that would allow you to continue to rent until you are 70 or 80.”
She said some people don’t mind sharing a 800 sq ft house with eight strangers.
‘‘Some tenants pay RM250 to share a room with a stranger. The living room is divided into four rooms in that 800sq ft space.
“His rent ratio to income is very low but he doesn’t mind,’’ she said.
Dr Suraya noted the different scenario in Malaysia compared to EU countries where there is a higher number of house ownership rate without mortgage.
This is not the case in Malaysia.
“Most landlords here have mortgage. To have a healthier rental market, landlords cannot be thinking that their mortgage payment should be subsidised by rent.”
She cited Germany where some people preferred to rent rather than own homes because it gave them mobility and the option to work in different cities.
However, she felt that it must be tough to be landlords in Germany where every three years, they would have to do maintenance to ensure everything was in working order. “If there is mould, they must replaster or re-tile the place. Every five years, they must paint and upgrade their premises.”
There is no legislation in Malaysia to compel landlords to maintain their homes. And to compound the problem, she said most people were concentrated in the Klang Valley for its job opportunities.
“This is where we see the escalation of prices.”
She said there is no proper data on rent in the country, so it is hard to determine its direction.
“There must be a way to determine rental prices in certain places in KL. And if there is a rapid escalation, then we can take action.”
She said that the terms in a tenancy agreement must be followed.
One tip from Dr Suraya: Talk to the neighbours about the upkeep of the place.
“That will show if it’s going to be a good place and the civic-consciousness of the people there.”