Fusion Bank, Midland Realty bring buy now, pay later business model to Hong Kong housing market
- Under the scheme, tenants can apply to Fusion Bank for loans, and use the money for lump-sum prepayment of leases
- Landlords will be more confident about tenants making payments on time, which will also boost supply, CUHK analyst says
Under the scheme, tenants can apply to Fusion Bank for loans for monthly rent payments. One-off loans can then be used for lump-sum prepayment of leases. It is expected that on the basis of sure payments to landlords, tenants can negotiate for better rents, as the landlords will not have to worry about missed payments.
The first offering of its kind in Hong Kong, the Fusion Bank and Midland scheme will gain traction in the coming months, given that rents typically take up a significant portion of incomes in the city, according to an analyst.
“Housing as a consumption good fits well into the buy now, pay later scheme as often offered by banks and financial companies,” said Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong (CUHK).
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The scheme offers more flexibility in terms of the number of instalments and the repayment period, and would boost demand for rental housing, especially among financially constrained would-be tenants, she added.