Seniors living in five-room and larger flats will be able to sell part of their leases back to the Housing Board from today. This allows them to monetise their homes, while continuing to live there.
Previously, the Lease Buyback Scheme was available only to owners of four-room or smaller HDB flats.
All owners must reach the eligibility age, currently set at 65 years, before they can sell part of the lease back. They must have a gross monthly household income of $12,000 or less, with at least one of the owners being a Singaporean, and have at least 20 years of lease to sell. At the same time, they must keep a minimum of 15 to 30 years of lease, depending on their age.
As of November last year, about 34,000 families would benefit from extending the scheme to five-roomers, bringing the total number of eligible households to about 130,000, the HDB said in a statement today.
Among them is part-time security guard Tang Lum Sui, 68, a widower who lives alone in his Jalan Bahagia five-room flat and had petitioned his MP several times to have the scheme - rolled out in 2009 - extended to home owners like him.
"I don't want to move out of Toa Payoh because I have lived here all my life, and I like that my son's family (living in Qatar) can stay with me whenever they come back to Singapore," he said . Mr Tang, whose flat has 67 years left on the lease, added: "As long as the terms are favourable, I will go for it."
How it pans out for a couple aged 65
The Housing Board gave an example of how much a couple, who are both 65 years old, might get for their fully paid-up five-room flat.
With 65 years left on its lease, the flat is valued at $520,000.
Assume that the couple - say, a Mr and Mrs Lim - join the Lease Buyback Scheme (LBS) and keep 30 years of the lease. They sell the remaining 35 years to the Housing Board for $219,300.
As Mr and Mrs Lim are joint owners, they will receive an equal split of the sale proceeds, amounting to $109,650 each.
They will each use their share of the proceeds to top up their Central Provident Fund (CPF) Retirement Accounts (RA) to the Basic Retirement Sum, which is $88,000 for their cohort.
Mr Lim needs to top up $68,000 as he started with $20,000 in his RA, while Mrs Lim needs to top up $83,000 as she started with $5,000 in her RA.
Mr and Mrs Lim will receive the full cash bonus of $5,000 as their total CPF Retirement Account top-up exceeds $60,000.
After topping up, they have remaining proceeds of $68,300. They can keep all of this in cash.
In total, Mr and Mrs Lim will receive $73,300 in cash (including the LBS bonus of $5,000) and will also receive monthly payouts of $1,000 under CPF Life for the rest of their lives.
The extension was first announced by National Development Minister Lawrence Wong last August as part of the short-term measures to help the elderly unlock the value of their HDB flats for retirement.
UNLOCKING VALUE OF HOMES
The changes will help our seniors fund their retirement by tapping their housing equity, while retiring in the comfort of their own neighbourhood. I expect it to be well-received.
NEE SOON GRC MP HENRY KWEK
On top of the proceeds they would receive from selling part of their remaining lease to the HDB, households living in larger flats will get an additional $5,000 bonus.
The HDB said those interested in the scheme can get personalised financial counselling so they can make informed choices. This includes going through the terms and conditions and a preliminary financial plan based on the estimated net proceeds sellers would get.
After selling part of their leases, owners must top up their Central Provident Fund (CPF) Retirement Accounts to the higher Full Retirement Sum for their age cohort if they are the sole owners, or to the Basic Retirement Sum if there are two or more owners.
After that, households may keep the next $100,000 in cash.
If there are proceeds leftover, owners have to top up their respective Retirement Accounts to the prevailing Full Retirement Sum before keeping the balance in cash.
At the counselling session, seniors will get an estimate of the monthly payouts from CPF Life which they can get if they sell their lease. HDB officers will also go through other monetisation options, such as renting out spare bedrooms to supplement seniors' retirement income and downsizing to a smaller flat, for which they can qualify for a Silver Housing Bonus of up to $20,000.
While the current take-up rate is relatively low - about 3,300 families have benefited to date - observers said the expansion will be especially appreciated by those who need it.
Nee Soon GRC MP Henry Kwek, who had urged the authorities to extend the scheme before, said: "The changes will help our seniors fund their retirement by tapping their housing equity, while retiring in the comfort of their own neighbourhood. I expect it to be well-received."