This scheme will be available to about 25,000 low-income households in Singapore, and is currently only for those aged 62 and above and who own two- or three-room HDB flats, said Mr Mah (left). -- ST PHOTO: SAMUEL HE
STARTING from next month, the Housing Board will accept applications from elderly folk who opt for its latest lease buy-back scheme, said National Development Minister Mah Bow Tan.
The scheme, which aims to help the elderly monetise their flats, was first unveiled by Prime Minister Lee Hsien Loong at the 2007 National Day Rally.
Eligibility Conditions for Lease Buyback Scheme
LBS is available to Singapore citizens owning 3-room or smaller flats where the outstanding mortgage loan is $5,000 or lower. They must also meet the following criteria:
The amount of monthly income that an elderly household will receive from the LBS will depend on the market value of the flat, the amount of remaining lease, the age and gender of the lessee.
Take the example of a three-room flat with a remaining lease of 70 years, and a market value of $236,000. The lessees sell to HDB 40 years of the lease, and continue to stay in the same flat which is left with a 30-year lease.
Essentially, HDB will buy back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household.
So, for example, if a flat has a remaining lease of 70 years, HDB buys 40 years of the lease from the flat owner. It pays market rate for the lease it buys and this money goes to the new CPF Life annuity in the flat owner's name.
According to Mr Mah, the cash is enough to give a typical flat owner about $500 monthly for life. At the end of 30 years, the flat's ownership is then transferred to HDB.
If the flat owner dies before the 30 years is up, his family gets a pro-rated refund from the HDB. If he outlives the 30-year lease, HDB may extend the lease or relocate the flat owner to rental housing.
To encourage people to opt for the scheme, HDB is also providing a $10,000 "bonus" for anyone eligible for the scheme who signs up. Half of this ? $5,000 ? will be paid immediately in cash. The other $5,000 goes into the CPF Life annuity.
This scheme will be available to about 25,000 low-income households in Singapore, and is currently only for those aged 62 and above and who own two- or three-room HDB flats, said Mr Mah.
Some MPs on Friday asked Mr Mah if the scheme could be extended to elderly folk who own four-room flats.
Mr Mah said he was "open to the idea", and HDB would monitor the demand for the scheme before rolling it out to others.
