SINGAPORE: The Lease Buyback Scheme offered by the Housing and Development Board (HDB) remains relevant even in a buoyant resale market where flat prices have seen steady growth, analysts said.
Particularly, it offers the option of “flexibility” to those who wish to age in their own homes but need extra funds for their retirement nest egg, they added.
Launched in 2009, the scheme allows those aged 65 and older to sell part of their flat’s lease back to HDB.
Those eligible can choose to retain lease lengths from 15 to 35 years, based on their age and needs, as long as the remaining lease covers the flat’s youngest owner until the age of 95.
Proceeds from the sale will be used to top up their Central Provident Fund (CPF) retirement account and purchase a CPF Life plan, which provides monthly payouts for life. Any excess after the retirement account top-up will be returned to the home owners in cash.
As of Jun 30, 12,656 households have sold part of their flat’s remaining lease back to HDB, with nine in 10 receiving between S$100,000 (US$75,500) and S$300,000.
Online commenters questioned if it makes sense for seniors to do this, especially amid rising property prices. Should seniors cash in instead by selling their flat and downsizing to a smaller home?
Analysts CNA spoke to said the scheme was drawn up to meet the needs of a specific group of flat owners – those who wish to age in place.
“This goes down to one’s understanding of an HDB flat – is it an investment or is it a home that I hope to live in until I die?” said Institute of Policy Studies (IPS) deputy director Christopher Gee.
“If we think about it as more the latter, the issue of whether I should sell because it’s now valued more doesn’t apply. Because if you sell it, you will no longer be able to live in it.”
More importantly, it offers home owners the ability to “decide how much liquidity” they want to raise with the asset they own.
“It does offer additional retirement funds but it goes one step further – one that can be customised for each individual, while still allowing him or her to live in his or her preferred property,” said Mr Gee.
From: channelnewsasia
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