The Government is considering more flexibility for those who choose to monetise a part of the lease of their housing board flats through the lease buyback scheme.
The scheme, introduced in 2009, allows owners “to sell the tail-end lease of their flat to the Government to enhance their retirement income” while continuing to live in the flat. (HDB)
Prime Minister Lee Hsien Loong had said in his National Day Rally speech in August that the Government would explore ways to make the scheme more flexible, to allow easier monetisation of their flats for elderly home owners.
He announced then that the scheme, which is for owners of 3-room or smaller flats, would be extended to owners of 4-room flats as well.
Under current rules, owners keep 30 years of their lease and sell the remainder to the Housing and Development Board (HDB). In return, they receive monthly payouts. Proceeds can also be used to top-up their Central Provident Fund (CPF) Retirement Account from which they would receive annuity payouts.
Eligibility rules include:
- All owners of the flat must have reached the CPF draw-down age, which is 65 for those born after 1953
- At least one owner must be a Singapore citizen, and the gross monthly household income must be no higher than $3,000
- No concurrent ownership of second property
- All owners must have lived in the flat for at least five years
- The owner cannot sell the flat in the open market or sublet the whole flat
Mr Khaw Boon Wan, Minister for National Development, said one idea to give the scheme more flexibility is to vary the period of the lease which it would buy back from owners.
Some owners are concerned that the lease may be too long or too short, depending on how old they are when they take up the scheme.
Those who join the scheme at a younger age may worry that they would be left without a home once their lease runs out. On the other hand, those who join when they are older worry that the 30-year lease is too long.
To address these varying concerns, Mr Khaw said there could be different leases offered to owners.
“For example, you can extend (the lease retained) from 30 to 35 years — that will bring applicants to the age of 100, which I think is probably sufficient for practically most of the users of this scheme,” he explained to the audience at a post-National Day Rally dialogue in his constituency of Sembawang GRC.
“And likewise, on the other hand,” he added, “to see how we can shorten the lease so you can have more upfront cash proceeds for those who are 80, 75 years old.”
In a similar dialogue over at the Sengkang Community Club, Deputy Prime Minister Teo Chee Hean responded to calls for the Government to extend the lease buyback scheme to owners of larger homes, such as 5-roomers and private property.
Residents told the DPM that some of them are reluctant to downgrade to smaller flats, or to move out and would prefer to remain where they are, and to be able to rent out more rooms.
However, Mr Teo said the scheme is not meant to “encourage people who stay in a flat that is really much bigger than (what) they really need.” (TODAY)
The aim of the scheme, he said, is to enable elderly Singaporeans who are living on their own to continue doing so.
“The three-room flat, well, is a little bit bigger than you need for two people, but is still okay. A four-room flat is a little bigger than that still, because you have two spare rooms for a four-room flat for two people,” TODAY quoted him as having said. “Now, you talk about the executive flat. Sometimes, you call it a six-room flat; for two people, that’s really a very, very big flat.”
He said owners of such flats or homes could consider other schemes available to them.
One of these, MP for Pasir-Ris Punggol GRC, Gan Thiam Poh, said, was the reverse mortgage scheme where the owner uses his flat as collateral for a loan, which he would have to pay back – with accumulated interest – upon termination or death.
The Government is studying the reverse mortgage scheme to see how it can be enhanced to help the elderly.
In the meantime, details of changes to the lease buyback scheme are expected to be revealed in about two weeks, Mr Khaw said.