The new Two-Room Flexi scheme for Housing Board flats will have lease options ranging from 15 to 45 years for older households.
These options will come in five-year increments, National Development Minister Khaw Boon Wan said in a blog post yesterday.
Flat applicants aged 55 and above can opt for these shorter leases, "provided the chosen lease will be able to allow them and their spouse to live in the flat till age 95 or above", he said.
The new housing scheme combines two existing ones - the studio apartment and the two-room flat schemes.
Currently, studio apartments are meant for elderly home owners who have sold a previous flat to fund their retirement. These have a 30-year lease and are for those aged at least 55.
Two-room flats come with a 99-year lease and are meant for families or singles. Both flat types come in 36 sq m or 45 sq m sizes, but studio apartments are cheaper owing to their shorter leases.
Mr Khaw had earlier said there was a need to merge both schemes, as they offer similar flats.
He likened the new scheme to mixing coffee and tea, much like the local drink "yuanyang".
He said: "Mixing coffee and tea requires balance, such that coffee lovers can still taste the coffee while tea drinkers can still enjoy the tea. And on top of that, both must get an extra distinct flavour and kick."
Under the new scheme, first- and second-timer families and first-timer singles can continue to buy two-room flats with 99-year leases from the HDB.
But because of the different lease options, pricing will take into account lease tenure and whether buyers are first- or second-timers, said Mr Khaw.
Shorter-lease flats will be cheaper, and second-timer buyers will pay more than first-timers as the latter will get more subsidies.
"Through a combination of pro-rated grants for first-timers and pro-rated resale levies for second-timers, we will be able to price the Two-Room Flexi flats so that recent buyers of studio apartments or two-room flats will find the Two-Room Flexi scheme to be fair," he said.
He added that these flats will also be affordable.
Public consultations are currently being held to iron out the scheme, which is expected to begin at the next Build-To-Order flat launch next month.
Mr Chris Koh, director of estate agency Chris International, said the flexibility of five-year intervals for shorter leases is a "win-win" for older flat buyers.
"Currently elderly folk have only a 30-year lease for studio apartments. Now, they can choose based on their budget and their age."
PropNex Realty's chief executive Mohamed Ismail Gafoor said that having a lease last until at least the age of 95 is "a good buffer given our greying population and rising life expectancy".