Published on 22 Dec 2023.
RAM Sustainability has completed its inaugural Social Impact Rating (SIR) of HouzKEY rent-to-own (RTO)/Ijarah Home Financing scheme offered by Maybank Islamic Berhad and managed by Maybank Ventures Sdn Bhd (MVSB or the Operator). We have assigned an initial SIR of (3.5 Star) out of (5 Star) to the scheme.
Figure 1: Rating Components of HouzKEY’s Social Impact Rating
The SIR is an assessment of the current and potential contribution of a social project, entity, product or service (the social solution) to meet the requirements of a clearly identified social gap with effective solutions. Our rating considers the importance, innovation, scale, duration, track record and governance of the solution.
HouzKEY is Malaysia’s first banking-group-initiated RTO scheme. The rating of the scheme is driven by the strong corporate and sustainability governance of Malayan Banking Berhad (Maybank) – which wholly owns the Operator – and the national housing affordability gap that HouzKEY addresses. As a product, HouzKEY is aligned to Maybank’s corporate and sustainability strategies and contributes to its sustainability commitments.
Given the cessation of government home financing schemes for the middle-income group, such as MyDeposit, My First Home and My Home, HouzKEY in our view addresses the gap in financing schemes available to the lower- to middle-income group, particularly the latter. We also foresee a potential long-term benefit in allowing individuals the opportunity to own a home through the 35-year financing tenure of the facility. The rating, however, is moderated by the limited scale of HouzKEY’s impact and track record of the scheme in view of its relatively recent inception.
“The housing affordability gap in Malaysia is apparent across different states and income groups. We believe HouzKEY has the potential to bridge this gap and we will continue to monitor its positive impact and effectiveness over time,” said Gladys Chua, CEO of RAM Sustainability.
HouzKEY is based on the Ijarah Muntahiyah Bi Tamlik shariah leasing facility, a lease contract that ends with ownership via sale. Introduced in 2018, HouzKEY is currently available only for properties in the primary market. Covering over 100 projects to date, the scheme has benefited over 5,600 households in Kuala Lumpur, Selangor, Putrajaya, Penang, Negeri Sembilan, Johor, Pahang and Sabah.
Successful applicants for HouzKEY are offered a financing margin of up to 105%, covering the downpayment and other transaction costs. While the initial tenure is five years, customers may exercise the option to refinance to a traditional mortgage with Maybank, Maybank Islamic, or other banks after a minimum occupancy of one year. The Operator works with corporations, organisations, state governments and the federal government to address challenges around access to homeownership.
RAM Sustainability is a provider of sustainability services and Environment, Social and Governance analytics. Incorporated on 31 May 2000, it is a wholly owned subsidiary of RAM Holdings Berhad. RAM Sustainability is the first ASEAN-based provider of sustainability ratings and second opinions. It also has the distinction of being the first Registered Observer of the International Capital Market Association’s Green Bond Principles, Social Bond Principles and Sustainability Bond Guidelines in the ASEAN region. On 12 August 2020, RAM became an Approved Verifier for the certification of climate bonds under the Climate Bonds Standard & Certification Scheme, after having been awarded the status by the Climate Bonds Standard Board. For further details, see https://www.ram.com.my/sustainability.
This external review or second opinion is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for an investor, nor does it involve any audit by RAM Sustainability.
Published by RAM Sustainability Sdn Bhd
© Copyright 2023 by RAM Sustainability Sdn Bhd