Elderly owners in all Housing Board flats - even those in five-room flats or executive maisonettes - can soon sell a part of their lease to the Government and use that income to fund their retirement years.
The Government is also looking to update rules so that people can dip more freely into their Central Provident Fund (CPF) savings when they purchase older flats.
National Development Minister Lawrence Wong announced these moves in a blog post yesterday, a day after Prime Minister Lee Hsien Loong outlined the Ministry of National Development's (MND) plans to systematically upgrade older HDB flats. Residents in selected precincts may even get to vote on whether to take up the Government's offer to buy back their flats.
"These are long-term plans which will be implemented over several decades," noted Mr Wong. "Meanwhile, MND will be making several shorter-term moves to help seniors unlock the value of their HDB flats for retirement."
Previously, the Lease Buyback Scheme was restricted to four-room or smaller flats. But Mr Wong said that there are seniors who prefer to age in place. "This (move) will enable many more Singaporeans to benefit from the scheme," he said.
Currently, to qualify for the scheme, home owners must be at least 65 years old and have at least 20 years of lease to sell to HDB, among other eligibility conditions.
The current take-up rate is relatively low, with about 2,500 families benefiting as of Nov 30 last year, since the scheme was implemented in 2009. The average proceeds they received are about $146,000.
Mr Steven Choo, chairman of real estate advisory firm VestAsia Group, said the change is likely to make the scheme more attractive: "If you have a 30-year lease on a five-room flat, it can be quite a tidy sum. If you crave security, this is a good option."
But National University of Singapore real estate professor Sing Tien Foo does not expect the take-up rate to increase by much. "Those who own a bigger flat technically should have higher incomes and may not need to monetise as much as those from lower-income families. The number of people who will sell the remainder of their leases should be quite manageable - too many, and that would strain the HDB's budget."
Mr Wong's ministry is also looking into how to let buyers of shorter-lease flats use more of their CPF monies for their purchase, without compromising on their retirement savings. Improving the liquidity of the resale market for older flats, he added, would facilitate an elderly resident's move to a smaller unit.
Currently, CPF can be used for the purchase of older HDB flats, but is subject to certain restrictions which kick in when the remaining lease is less than 60 years. For example, a home owner can use his CPF money if his age plus the number of years left on the remaining lease of the property is at least 80 years, but that too is subject to certain restrictions.
No CPF money can be used if the remaining lease is less than 30 years.
"These rules are meant to ensure that buyers purchase a home for life, without compromising their retirement savings," he said. But he added that there is "scope to provide more flexibility for buyers of shorter-lease flats while safeguarding their retirement adequacy".
Mr Wong said the moves - the result of many months of intensive study - are "meant to prepare for the future responsibly".
