Renters Advised To Keep Rent Below 30% Of Income
If you’re forking out more than 30% of your salary to pay your rent, you’re paying too much. That’s the message Khazanah Research Institute’s research director Dr Suraya Ismail wants to tell you.
Dr Suraya has warned tenants not to let their rent be more than 30% of their salary as this is typically what one would pay to own a home. So when renting, it should be below that 30%.
She then recommends that if two-thirds of the 30% of your income goes to rent, put the remaining one-third into a unit trust or some financial instrument. In this way, you will get returns that would allow you to continue to rent until you are 70 or 80.
She explains that many landlords in Malaysia have mortgage. To have a healthier rental market, landlords cannot be thinking that their mortgage payment should be subsidised by rent.
There is also 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 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 there is no proper data on rent in the country, so it is hard to determine its direction.