Singapore HDB’s new Lease Buyback Scheme to benefit 25,000 elderly households
By Wong Siew Ying,
SINGAPORE : Some 25,000 households, or 70 per cent, of two- and three-room flat owners will benefit from HDB’s new Lease Buyback Scheme.
Under this scheme, the Housing Board will buy back the tail end of the flat lease from elderly owners, to help them unlock the value from their flat.
Details were announced by National Development Minister Mah Bow Tan in his speech
Low income elderly households can sign up for the Lease Buyback Scheme to monetise their flat to meet retirement needs.
Under the scheme, those above 62-years-old can sell the tail end of their flat’s lease back to the HDB at market rate.
The household can continue to stay in their flat, which will be left with a 30-year lease.
Mr Mah said: “In addition to the housing equity that is unlocked by this purchase of the tail end of the lease, HDB will provide a S$10,000 subsidy. Out of this S$10,000 subsidy, S$5,000 will be given to the household as an upfront lump sum payment. The remainder will then be used to purchase a CPF LIFE Plan to provide the owner with a steady stream of income for life.”
For instance, a household living in a three-room flat with a 70-year lease valued at S$200,000 can expect to pocket S$97,000.
The sum will include S$87,000 for 40 years of their flat’s lease, after factoring in depreciation and a S$10,000 government subsidy.
Of this, S$92,000 go to the purchase of the CPF LIFE Plan and S$5,000 will be paid out to the household in cash.
Using the same illustration, the CPF LIFE Plan will yield a monthly payout of between S$460 and S$490 for the household for the rest of their life.
However, the annuity terms will vary depending on the age and gender of the owners.
And should the elderly outlive the 30-year lease, HDB says they can choose to have it extended.
Appropriate housing arrangement will also be made on a case-by-case basis for those who cannot pay for the lease extension.
Those who opt for the Lease Buyback Scheme will not be allowed to sell the flat in the resale market, nor sublet the entire flat.
However, they may return their lease prematurely to the HDB under special circumstances, such as the relocation of the owner to an institutional home.
The HDB will then reimburse the residual value of the lease.
To prevent abuse of the scheme, HDB will impose a pro-rated forfeit of the S$10,000 subsidy, if the flat is returned within the first five years.
The Scheme will be introduced next year.
Only elderly households in 3-room or smaller flat, who earns up to S$3,000 a month are eligible.
And they must not have enjoyed more than one housing subsidy or owned a larger flat or private residential property previously.
To be eligible, the household must also have lived in the flat for at least five years and not have any outstanding loan on their flat exceeding S$5,000.
Mr Mah says HDB will assess if the scheme should be extended to 4-room flat households. - CNA/ch
Source : Channel NewsAsia - 29 Feb 2008
Singapore Property - Buy , Sell , Rent , Invest
Mindy Yong
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mindy@mindyyong.com
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