AS part of the government’s willingness to explore new, technology-enabled and innovative mechanisms, it will 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 exchange platforms under the peer-to-peer (P2P) financing framework.
Under the P2P financing framework, the buyer will be able to acquire a selected property with 20% of the price of the premises.
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.
According to Finance Minister Lim Guan Eng, the P2P exchange will go live in the first quarter of next year for first-time home buyers.
This financial innovation for first-time home buyers is the first of its kind in the world, and if successful, will make acquiring a home affordable for many, he said.
At the moment, the P2P financing structure is only for small and medium enterprises and not available to the retail home loan segment.
Areca Capital CEO Danny Wong said for a potential investor to make his money, there must be a sales transaction.
Wong also said that for such a transaction to work, the buyer must be able to come up with 20% of downpayment money on his own.
“If one can do that ... I think he can easily get a bank loan and would not need to resort to crowdfunding,” he said.