A touch of micro financing for renting homes in Yangon

Source : Myanmar Times
View Count : 657
Mar 05, 2019

As more and more people move to Yangon to seek work every year, the housing shortage in the city becomes increasingly acute.
       One form of housing that has emerged to serve the needs of middle-class workers seeking accommodations is hostels and rented rooms. Even as the rest of Yangon’s property market remains flat, demand for hostel housing has risen.
       In tandem with the country’s growing economy, workers who have seen their pay rise are increasingly seeking to move from crowded hostels to rented low-cost apartments that they can share with perhaps two or three other people to lighten the financial load.
       However, rooms in Yangon are being rented out on six-month or one-year leases, with several months of rent, sometimes up to a year, paid upfront upon the agreement of a deal. Additionally, renters have to pay the equivalent of a month’s rent to property agents who act as middlemen for property owners.
       Those who struggle to make lump sum payments are still unable to move from hostels.
       Over the last year or so, real estate services websites started to emerge to cater to the needs of people seeking property to buy or rent. This allows property seekers to cover more ground, so to speak, online.
       Property services company Nay Yar recently launched an innovative service where it pays six months of rent upfront for people who are not are not in a position to pay in one lump sum. Nay Yar then charges the renters a small fee of three percent a month on the rent.
       During its ongoing trial run, Nay Yar will make lump-sum payments on behalf of tenants for apartments being rented for up to K200,000 month, and if the service proves viable it will be expanded, said Nay Yar CEO Ko Andrew Kyaw.
       In the example of an apartment being rented for K200,000 a month, the company will pay the six –month upfront lump sum of K1.2 million in rent for the client and receive 18 percent as a fee for the service.
       The service fee has to be repaid within six months, so, tenants will have to pay total of K36,000 in fees to Nay Yar.
       “Although it seems that our service fee three percent a month for six months is high, it is much lower than the interest rates for small loans tenants would otherwise have to appy for,” said Ko Andrew Kyaw.
       “Anyone who is employed with a reasonable income deserves to have a good place to live. I started this business with the intention to help them solve their financial problems,” he said.
       The company plans to partner with more property owners to expand the service, and is also looking into providing fee-based services such as rubbish collection, drinking-water delivery, and other domestic services to its clients.
       “As it is still a trial period, only room rental services are available for now. Many people have contacted us about the service, but we are careful about who we select as what we are providing is essentially a financial service,” said Ko Andrew Kyaw.
       Anyone who would like to rent through the company’s Site Hngar Plan must be at least 20 years of age and will have to present their national registration card (NRC), a copy of their permanent census document or rural household census document for those who come from rural areas, a recommendation letter from their employer. The recommendation letter needs to come with the company’s letterhead with the company’s address, along with the applicant’s name, salary, length of service and position.
       A copy of a guarantor's NRC, current employer, position, phone number and address are also required. If the applicant fails to repay the loan, the guarantor will have to pay for it.
       As it is a financial service business, the decision to give out a loan depends on the regular income of the applicant, said Ko Andrew Kyaw.
       According to the requirements of Site Nhar Program, the applicants will have to directly rent from a landlord. If a property is obtained through an agent, Na Yar will not pay for agent’s fee.
       Nayar will also collect half of a month's rent from the landlord as service charge. One month of rent will have to be deposited.
       The tenant will have to stay for in the property for six months and cannot move out during that time. Na Yar will draw up the rental contract with the landlord.


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