Sena unveils rent-to-own strategy to tackle mortgage rejections

Photo courtesy of Bangkok Post

Sena Development, a publicly traded property developer, revealed new plans this month to rent and transfer ownership of its unsold condo units. This move is in response to a high rate of mortgage rejections. The company aims to enhance sales and revenue in the current year.

Kessara Thanyalakpark, the managing director, stated that the innovative strategies would target two distinct demographics. One involves renting units to prospective buyers who will eventually own them, while the other focuses on individuals initially interested in renting, she said.

“We aim to use the new strategies to boost sales of our completed unsold units totalling 5,000, valued at a combined 10 billion baht (US$279 million).”

The company’s rent-to-own strategy is primed for Generation X, who typically prefer owning assets but often encounter hurdles when securing a mortgage loan, predominantly due to financial issues. Under this strategy, Sena will rent out units for up to three years, allowing buyers more time to prepare their financial records to secure a mortgage loan. Once buyers are ready, Sena will transfer ownership to them, deducting the rent already paid from the unit price, Kessara said.

“Residential demand in the lower-end segment remains robust, but there are challenges in securing mortgages. “Rather than shifting to upper-end segments like other developers, we will use the new strategies to address this issue.”

Last year Sena had a mortgage rejection rate of 50% due to the majority of their products being units in the lower to middle-end segments.

Residential projects

Out of the company’s 99 residential projects valued at a total of 116.4 billion baht (US$3.24 billion), 27 projects are in an income segment of 15,000 (US$418) – 25,000 baht (US$698) per household per month, six in the 20,000 (US$558) – 25,000 baht range and 24 in the 25,000-45,000 baht (US$1,256) range.

Sena’s research shows that 70% of households in Greater Bangkok (a total of 5.61 million) had an income of 40,000 baht or lower per month, allowing them to afford units priced at 4.9 million baht or lower. This demographic, along with those earning 30,000 baht (US$837) or lower who can afford units priced 3.6 million baht (US$100,512) or lower, are Sena’s primary targets, making up 54%, said Kessara.

“The rent-to-own strategy and our non-bank mortgage loan, which was launched last year, may not have reduced the mortgage rejection rate from 50% to zero, but achieving a rate of 30% is considered a success.”

The second strategy caters to younger generations who have adopted a non-ownership lifestyle, akin to streaming music and videos, reported Bangkok Post.

Business News

Alex Morgan

Alex is a 42-year-old former corporate executive and business consultant with a degree in business administration. Boasting over 15 years of experience working in various industries, including technology, finance, and marketing, Alex has acquired in-depth knowledge about business strategies, management principles, and market trends. In recent years, Alex has transitioned into writing business articles and providing expert commentary on business-related issues. Fluent in English and proficient in data analysis, Alex strives to deliver well-researched and insightful content to readers, combining practical experience with a keen analytical eye to offer valuable perspectives on the ever-evolving business landscape.

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