Elderly flat owners who opt for Housing Board's (HDB) Lease Buyback Scheme may be given the option to retain more or fewer years on their flat's lease, it was announced on Aug 31.
The move aims to make the scheme more flexible and attractive. Currently, those who opt for the scheme retain 30 years of the lease on their flat and sell the remaining period to the HDB in return for monthly payouts. But some are concerned that they may outlive the 30-year period, while others who join the scheme when they are older, say at 80 years old, may find the lease too long.
Details on the changes are expected to be announced this week.
The latest round of tweaks followed Prime Minister Lee Hsien Loong's announcement during the National Day Rally speech in August that the scheme, originally restricted to three-room and smaller flats, will be extended to four-room flats.
We look at key facts about the scheme:
1. What's the scheme about?
Introduced in 2009, the scheme gives elderly low-income home owners the option of monetising their property while continue living in their home. Owners can sell part of their flat’s 99-year lease back to the Government, keeping only a 30-year lease.
Proceeds will be used to top up their Central Provident Fund (CPF) Retirement Accounts, thus enabling them to receive larger monthly payouts under the CPF Life scheme. The rest of the sales proceeds will go to the home owners as a lump sum in cash.
2. Who is eligible for the scheme?
The scheme targets low-income elderly households. To qualify for the scheme, members of such a household must meet certain conditions, which include:
- All owners of the flat must have reached the CPF draw-down age, which is 65 for those born after 1953- At least one owner must be a Singapore citizen, and the gross monthly household income must be no higher than $3,000- No concurrent ownership of second property- All owners must have lived in the flat for at least five years- The owner cannot sell the flat in the open market or sublet the whole flat
The scheme, initially meant for only three-room and smaller flats, will be extended to four-room flats so that more can consider the option. This means that about 75 per cent of seniors will be eligible for the scheme, compared with about 35 per cent previously.
3. How does it work?
Take the example of an elderly couple who own a 3-room flat in Bedok, which has a remaining lease of 70 years and a market value of $323,000.
Under the scheme, HDB will buy 40 years of the lease at $138,000. The couple will use the $138,000 to top up their CPF Retirement Accounts up to the specified limits. The top-ups, plus the initial RA balances (ie. full RA savings), will be used to buy a CPF Life plan to give the elderly couple a monthly stream of income for life.
4. What if the flat owner outlives the 30-year lease?
There may be cases where the flat owner outlives the 30-year lease. Such cases will be dealt with on an individual basis and appropriate housing arrangements will be provided to those flat owners who are not in a position to pay for the lease extension.
No elderly flat owner will be left homeless if he/she outlives the 30-year lease of the flat, says the HDB website.
5. What's the take-up rate like so far?
The response has been lukewarm. Up until January last year, only 471 households took part.
The rules were relaxed in February last year, allowing home owners who have enjoyed more than one housing subsidy and previous owners of private property to qualify. Since then, another 312 households have signed up, according to a parliamentary reply in July.
MPs and experts say some seniors still worry about being chased out of their homes if they outlive the 30-year lease on their homes. Many Singaporeans also wish to keep their flat so they can leave it to their children.