Singaporeans aged 55 and above who live in HDB addresses have two options if they want to monetise their property, said experts quoted in the media.
They can sublet their unit but this option is only available to those with a room to spare, while those with other living quarters can rent out the entire unit.
For instance, 65-year old Madam Han Siew Lan has been leasing out her four-room flat in Bukit Merah since 2011, after she shifted to her daughter’s five-room flat in a neighbouring block. At the moment, she gets around $2,900 per month.
“Each month, I use about $700 to $800 for my daily expenses. The rest, I use to buy insurance or save,” she said.
According to one property portal, the median rent for a four-room HDB flat stands at $2,400, while the median rent for a bedroom was $650 last month, said the housing board.
Renting out a whole flat gives a return of between six and eight percent. “This is very high considering private residential rental returns are only in the bracket of two to perhaps four percent,” said ERA Realty Network’s Key Executive Officer Eugene Lim.
However, only 10 percent of seniors take up this option due to the lack of a spare room, privacy and security concerns, as well as having ample cash.
Another option is the lease buyback scheme, which has been extended to four-room flats from just three-room or smaller flats previously. But seniors who wish to apply should have met the CPF drawdown age of 63, and their flats should have a remaining lease of 70 years.
After applying, the flat’s value will be determined by a professional and then the owner will retain the 30-year lease, while the 40-year lease will be sold to HDB. So far, only 797 households have taken up the scheme since it was introduced in 2009.
“The two main concerns is firstly, your flat will no longer be allowed to be sold in the open market. If you do not need the flat anymore, you will have to sell it to HDB. Secondly, you will not be able to bequeath your flats to your successor,” explained Lim.
Currently, seniors own about 293,000 HDB flats, of which 72 percent have three or four rooms.
Romesh Navaratnarajah, Singapore Editor of PropertyGuru Group, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
