The HDB lease buyback scheme allows flat owners to turn their flats into retirement funds while still living in them.
Owners of 5-room and larger flats also able to access the buyback scheme
The scheme was rolled out in 2009 but was previously only made available to owners of 4-room and smaller units.
However, since November 2018, owners of all flat types including 5-room and larger flats can now also benefit from this scheme.
Other criteria will however still apply:
- Income ceiling of $12,000 per household or less.
- The Minimum Occupation Period (MOP) of 5 years has been met.
- Flat owners do not have ownership of other properties
- One of more owners must be a Singapore citizen.
- The flat must have at least 20 years of the lease to sell.
- A minimum of 15 to 30 years of the lease must be kept on the flat (depending on the age of the flat)
Now, about 130,000 families will qualify for the buyback scheme and this may bring cheer to many senior citizens who wish to stay on in neighbourhoods they are familiar with while receiving a sum on which they can retire.
HDB owners need to top up CPF retirement funds first
While the scheme is a viable way for flat owners to monetise their flats, the amount they will ultimately receive is subjected to some restrictions.
When a flat owner sells part of the lease back to HDB, the amount they will receive is only after:
- Topping up their Central Provident Fund (CPF) Retirement Accounts (RA) up to the Full Retirement Sum (for sole owners) and Basic Retirement Sum (for flats with 2 or more owners).
- The remaining $100,000 cash can then be kept by the flat owner.
- Proceeds in excess of $100,000 need to be used to top up to the Full Retirement Sum
- The flat owners can use then use their CPF RA savings to join CPF LIFE, which will provide them with a monthly income for life.
There are some bonuses to be had:
- Households living in 5-room or larger flats will receive a $5,000 bonus
- Senior citizens who downsize to a smaller flat may qualify for a Silver Housing Bonus or up to $20,000.
This may change the way buyers view the values of resale HDB flats, in particular, older flats; and also offer more options to senior citizens who may not have sufficient funds for their retirement or do not wish to sell their units.
HDB is offering financial counselling to flat owners who wish to take advantage of the Lease Buyback Scheme.