Households on HDB lease buyback scheme received $100k-$300k
The vast majority of households which have opted for the Housing Board’s Lease Buyback Scheme (LBS) received between $100,000 and $300,000 in proceeds for selling part of their flat’s lease back to HDB.
This was the case for more than 90 per cent of the 12,656 households which have tapped the scheme as at June 30, HDB said in an update on the LBS on Aug 14.
HDB’s figures show that the take-up rate for the LBS has remained steady, at an average of 1,680 households annually over the last five years.
Launched in 2009, the LBS allows those aged 65 and older to supplement their retirement income by selling part of their flat’s lease back to HDB.
Proceeds from the sale are used to top up their Central Provident Fund (CPF) Retirement Account and purchase a CPF Life plan, which provides monthly payouts for life. Any balance proceeds after the CPF Retirement Account top-up are returned to home owners in cash.
Depending on the quantum of the CPF top-up, HDB also provides an additional cash bonus to home owners under the LBS. This ranges from $7,500 to $30,000.
Households can choose to retain lease lengths from 15 to 35 years (in increments of five years), as long as the remaining lease covers the flat’s youngest owner until the age of 95.
In its statement, HDB said just over half of the households which took up the LBS live in three-room or smaller flats.
About 33 per cent own four-room flats, while the remaining 14 per cent live in five-room or larger flats, HDB added.
About 65 per cent of households opted to retain at least 30 years of their lease.
Pointing to the the fact that more than half of the households which have tapped the LBS lived in three-room or small flats, Professor Sing Tien Foo, provost’s chair professor of real estate at NUS Business School, said seniors living in these homes are more likely to face financial constraints that will make the LBS more more attractive to them.
“The scheme benefits seniors who know they want to live in the same home until their final days and may need help to boost their retirement income. Some of them may not have been able to top up their CPF Retirement Accounts, especially as many have tapped their CPF to fund their housing,” Prof Sing said.
While take-up for the LBS has remained low over the years, Prof Sing said it could increase in a few years, as one in four Singaporeans will meet the scheme’s age requirement of 65 and older by 2030. Currently, that figure is about one in five.
Among those who have opted for the scheme is 67-year-old warehouse cleaner Ramli Daud, who lives in a four-room flat in Jurong West.
He received about $216,000 in proceeds for selling part of his flat’s lease back to HDB in February, of which about $133,000 went to his CPF Retirement Account, and about $83,000 was given to him in cash.
Mr Ramli, who is single and has no children, kept 30 years’ lease on his flat, where he has lived for the past 23 years.
He told The Straits Times he decided against selling the flat after his father died in 2012. “I like living here because it is quiet and I have my privacy. If I were to sell my flat, I would have to move in with my family members,” he said.
He added that the cash proceeds and CPF payouts have allowed him to quit his part-time job working as a cleaner at Jurong West Hawker Centre, where he worked evening shifts on top of his day job.
“I can now take more of a break and not work so hard. Before, I could not afford to buy people makan (food). Now, I can buy my friends and colleagues a meal once in a while,” he said.
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