The Ministry of National Development (MND) together with the Housing & Development Board (HDB) today announced four enhancements to the Lease Buyback Scheme (LBS), which will benefit more elderly households and offers greater flexibility to suit different needs.
Firstly, the LBS will be extended to 4-room flats covering 75 percent of elderly HDB households compared to the current 35 percent. In addition to the proceeds received from selling the tail-end lease of their flat to the housing board, each 4-room household will get a cash bonus of $10,000 for participating in the scheme.
The income ceiling for participating households will also be raised from $3,000 to $10,000 per month. Similarly, the income ceiling for the Silver Housing Bonus (SHB) scheme will be upped to $10,000 from $3,000. MND said this is to help elderly Singaporeans who are still working and/or living with their family members to qualify for these schemes.
Meanwhile, the requirement for households with two or more owners to top up their CPF Retirement Accounts (RAs) with the LBS proceeds will be relaxed. For these households, each owner will only be required to top up his or her CPF RA to half the age-adjusted prevailing CPF Minimum Sum, and they will be able to withdraw more cash upfront. However, the $100,000 cap on the household’s cash proceeds will be retained. Owners will be required to top up the excess of $100,000 into their respective CPF RAs.
Elderly households will also have the flexibility to choose the length of lease they want to retain, based on their age and preferences, instead of sticking to the standard 30-year lease. Specifically, those aged 70 to 74 will have the option of a 25-year lease, those aged 75 to 79 will have the option of a 20-year lease, and those aged 80 or older will have the option of a 15-year lease. Those who want longer leases can choose to retain more than the minimum required for their age, in five-year increments, up to a maximum of 35 years.
The changes take effect on 1 April 2015 and the government will step up outreach efforts to help elderly households understand the changes.
The improved scheme is in response to feedback received from Singaporeans when they shared their views on monetisation options for the elderly during the Our Singapore Conversation on Housing.
The issue was also raised last month during Prime Minister Lee Hsien Loong’s National Day Rally speech, when he announced that the scheme would be extended to 4-room flats.
Meanwhile, Mohamed Ismail, CEO of PropNex Realty, said the enhanced scheme will be welcomed by many households.
“When the Lease Buyback Scheme was first introduced in 2009 and rules relaxed in 2013, it received lukewarm response due to the rigid 30-year lease period and lesser upfront cash proceeds. We expect to see multi-fold increase in the application for the Lease Buyback Scheme now, as it is finally ready to take off in allowing elderly families to monetise their HDB flat to supplement their retirement income, while continuing to age in place in their own home.”
Ismail expects there will be more than 1,000 applicants for this scheme within a year from its effective date.
Romesh Navaratnarajah, Singapore Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
