HDB flats a ‘good store of asset’ for future retirement needs
SINGAPORE — Less than three weeks after his initial Facebook post triggered a strong public reaction, National Development Minister Lawrence Wong on Wednesday (April 12) reiterated that Housing and Development Board (HDB) flats provide a “good store of asset value, so long as you plan ahead and make prudent housing decisions”.
“Your HDB leasehold flat is not only a good home, but also a nest-egg for future retirement needs,” said Mr Wong, who provided several examples to reinforce his point.
“That’s what we have achieved and that’s what we will continue to ensure — both now and in the future.”
On March 24, Mr Wong cautioned in a Facebook post that prospective home buyers should not assume that all old HDB flats will be automatically eligible for the Selective En bloc Redevelopment Scheme, or Sers. Expressing his concern that some buyers are forking out high prices for older flats in anticipation of Sers, Mr Wong had noted that only 4 per cent of HDB flats have been identified for Sers since the scheme’s launch in 1995.
But analysts previously told TODAY that the warning may go unheeded for the time being because of the prevalent mindset among buyers today: They are looking to buy a HDB flat and sell it off within five to 10 years, in contrast to the previous generation which generally bought flats with the intention of living in them for decades.
Mr Wong’s comments also prompted some concerns among the public about the value of HDB flats as an asset, especially for retirees. Others questioned how the Government’s asset-enhancement policy for public housing would apply when HDB flats have to be returned to the Government upon expiry of their lease.
On Wednesday, Mr Wong acknowledged that his previous post had “generated some discussion and debate”.
Reiterating that HDB flats are sold on a 99-year lease “like many private properties”, he noted that Singaporean couples benefit from “significant subsidies” when they buy a Build-to-Order or resale HDB flat for the first time.
He cited a hypothetical example of a 30-year-old couple, with a combined monthly income of S$5,000, looking for a resale flat in Woodlands near their parents.
“They can get up to S$75,000 in grants off the resale flat price, and should easily afford a flat with a reasonably long lease of 90 years,” he said.
“Thirty-five years later, the couple will be 65 and the remaining lease of the flat will be 55 years. They still have an asset which can be monetised for retirement.”
He added that currently, a 65-year-old elderly couple living in a 4-room flat in Woodlands with 55 years of lease remaining can “sell their flat and right-size to a nearby 2-room Flexi flat with a 30-year lease”.
Apart from receiving a Silver Housing Bonus of S$20,000 in cash, the couple can also “get quite a lot of money from the sale proceeds — around S$100,000 up front in cash, plus S$500 per month of additional income for their retirement (on top of what they would get through CPF Life)”, Mr Wong pointed out.
If the couple prefers to stay in the same flat, they can apply for the Lease Buyback Scheme under which they can continue living in the flat for 30 years and sell the remaining 25 years back to HDB.
In this case, they will get a cash bonus of S$10,000. On top of that, they will get S$47,000 in cash plus S$400 a month for retirement, Mr Wong said.
“The cash amount is not as much as if they were to right-size, but that’s because they can continue to stay in the same flat, and also have the option to rent out a room,” said Mr Wong, adding that the “simple examples” he provided were “typical of many HDB households”.