As the Singaporean population ages, more elderly are letting go of their resale flats and opting for shorter-lease ones provided by the government. What do they benefit from this move?
2 schemes to help the elderly plan for their retirement
These particular HDB flats fall under the two-room flexi scheme and the most popular option are flats with 15- to 40-year leases. The two-room flexi scheme is one of the schemes HDB has in place to help senior citizens monetize their ageing HDB flats.
Older flats with fewer number of years left on their leases are losing favour with open market buyers as they are deemed as having less resale value and may even eventually be taken back by the authorities in the lifetime of their buyers, especially if they are younger.
Senior citizens are seeing this as a viable way to cash-in on their assets for retirement. Previously there were some elderly folks who had considerably-sized flats which they lived in but barely had sufficient funds for retirement, especially is their children have moved away. For them, selling was not an option as they would then have nowhere else to stay. But with this scheme in place, they can now sell their existing flat in the open market and purchase a newer and cheaper 2-room flat directly from HDB.
Under normal circumstances, each Singaporean is allowed 2 applications of HDB flats. But this restriction only applies to flats with 99-year leases. For the selection of shorter-lease 2-room flats, applicants are allowed to apply even with having used up both their 2 chances at applying for new flats.
There is also the Lease Buyback Scheme (LBS) that helps elderly household living in a 4-room or smaller flat plan for their retirement while continuing to live in it.
Under the LBS, the elderly owners can sell part of their flats’ lease back to HDB and retain the length of lease based on the age of the youngest owner. To qualify for this scheme, all owners must have reached the age of 65 or older and at lease one must be a Singaporean citizen.
Implications for the resale HDB market
9 out of 10 flat buyers aged 55 and above have already been opting for this scheme after its implementation in 2015. As the silver generation grows, and the number of older resale flats increases, how will the resale HDB market respond to this shift? Will the value of public housing fall and will they still have any resale value?
As private property options are now wider, perhaps the younger generation will be looking at entering the private market earlier and leaving more public housing options for those in need.
Will public housing then return to its original roots of helping those in need rather than be the common ground for families? How then will that impact the social fabric of Singapore? Will the country be steered towards the likes of Hong Kong and Tokyo?