Malaysia considers city rent support allowance for M40 households

Introducing a city rent support allowance could offer direct financial relief to middle-income households in urban areas, helping them cover a portion of their rent without the pressure of homeownership. This proposal is suggested for consideration in the 2027 Budget as a strategic policy intervention to support M40 (middle 40% income group) households struggling with escalating living costs.

Associate Professor Dr. Salwani Arbak from Universiti Utara Malaysia's International Studies School proposes that this allowance would involve targeted cash assistance of RM300 to RM500 per month for M40 households renting in major urban centers. Additionally, she suggests tax incentives for homeowners who rent their properties at controlled rates to registered M40 tenants. Salwani argues that many Asian countries, including Malaysia, are overly focused on homeownership rates, which inadvertently drives up property prices.

"In Germany, the government introduced Wohngeld (housing allowance), which is direct financial assistance for middle-income renters to cover part of their housing costs without needing to own a home," she explained. "The government could also introduce new income tax reliefs or increase existing limits for home rental payments for M40 households in urban areas. This acknowledges that many in this group still cannot afford property ownership."

Salwani also suggests expanding the Rent-to-Own (RTO) scheme through special allocations in collaboration with local authorities and private developers, specifically for affordable housing projects in strategic urban locations. This could help reduce daily transportation costs. Furthermore, a policy framework to control unreasonable rent increases in key urban areas could be considered to protect tenants from market exploitation. To further ease financial burdens, she proposes the "Tiket Transit Integrasi Nasional," a subsidized monthly public transport pass for RM100, offering unlimited use across all public transport modes in the Klang Valley, Rapid Penang, and Rapid JB. This, she estimates, could increase the disposable income of urban M40 households by RM1,000 to RM1,500 annually, which would then recirculate into the domestic economy through a multiplier effect. She cites Germany's "Deutschlandticket" at €49 (approximately RM250) per month for nationwide public transport access as a successful model that reduces living costs, traffic congestion, and pollution.