Rent allowance needs income, market, location formula

KUALA LUMPUR: An economic analyst proposed a "3P" approach, income, market, and location, for urban rent allowances to ensure government aid reaches low- and middle-income households struggling with the cost of living. Professor Aimi Zulhazmi Abdul Rashid of Universiti Kuala Lumpur (UniKL) emphasized the need for clear criteria to prevent leakage and target aid effectively.

Rashid suggested using data from Malaysia's central database (PADU) and the Inland Revenue Board (LHDN) to identify urban B40 and M40 groups genuinely needing assistance. He argued against uniform income thresholds, citing regional cost of living and rent variations. "The rent allowance must be mandatory. Otherwise, the policy will leak and not reach those eligible," he stated.

He proposed the government cover 30 to 50 percent of rent costs, with maximum caps varying by location. For instance, a RM500 ceiling in Kuala Lumpur and RM350 in Johor Bahru would account for differing rental markets. "Rent costs in Kuala Lumpur and Alor Setar are vastly different, so there needs to be an allowance zone to make the aid relevant," Rashid explained.

To prevent landlords from raising rents due to the allowance, Rashid recommended mandatory registration of rental agreements through the Ministry of Housing and Local Government (KPKT) or LHDN. This would allow the government to track unreasonable increases. He also suggested tax incentives for landlords who maintain reasonable rents and for government-linked companies to increase the supply of affordable rental housing. "Allowances, governance, and increasing supply must happen simultaneously. If the government only gives allowances without control, we are actually subsidizing landlords, not tenants," he warned.

Utusan Malaysia previously reported on the potential introduction of an urban rent support allowance as direct financial aid for middle-income renters, possibly considered in the 2027 budget as a strategic intervention for urban M40 households.