HDB flats are still nest eggs for future retirement needs: Lawrence Wong

HDB flats are sold on a 99-year lease.
HDB flats are sold on a 99-year lease.PHOTO: ST FILE

SINGAPORE - Leasehold properties are still a good store of asset value, so long as you plan ahead and make prudent housing decisions, wrote National Development Minister Lawrence Wong in a Facebook post.

This is a follow-up to his cautionary note last month (March 24) on the high prices of older Housing Board flats on the resale market, which generated discussions and debate over the 99-year lease, he said.

HDB flats, like many private properties, are sold on a 99-year lease.

Wrote Mr Wong on Wednesday: "To begin with, Singaporean couples enjoy significant subsidies when they purchase a HDB flat for the first time, be it a new flat or one from the resale market."

A 30-year-old couple, for example, with a combined monthly income of $5,000 and looking for a resale flat in Woodlands near their parents can get up to $75,000 in grants off the resale flat price and should easily afford a flat with a lease of 90 years.

Mr Wong wrote: "Thirty-five years later, the couple will be 65 and the remaining lease of the flat will be 55 years. They still have an asset which can be monetised for retirement."

This is already happening in Woodlands, he added, sharing the example of a 65-year-old elderly couple living in a four-room flat with 55 years of lease remaining in Woodlands.


Through the Silver Housing Bonus scheme, the couple can sell their flat and right-size to a nearby two-room Flexi flat with a 30-year lease, while enjoying a bonus of $20,000 in cash.

Said Mr Wong: "They can also get quite a lot of money from the sale proceeds - around $100,000 upfront in cash, plus $500 per month of additional income for their retirement (on top of what they would get through CPF Life)."

Alternatively, they can apply for the Lease Buyback Scheme, which allows them to continue living in the flat for 30 years and sell the remaining 25 years of lease back to HDB, he pointed out.

This would give them $47,000 in cash and a monthly retirement income of $400 under the scheme, on top of a cash bonus of $10,000.

"The cash amount is not as much as if they were to right-size, but that's because they can continue to stay in the same flat, and also have the option to rent out a room," Mr Wong added.

These examples are typical of many HDB households today, he said.

He wrote: "The general point is that the HDB leasehold flat is not only a good home, but also a nest-egg for future retirement needs.

"That's what we have achieved and that's what we will continue to ensure - both now and in the future."