Unlocking the value of HDB flats for retirement

SINGAPORE — The Enhanced Lease Buyback Scheme designed by the Housing and Development Board (HDB) is aimed at helping low-income elderly households monetise the value of their house for retirement.

Under the scheme, elderly flat owners who live in three-room and smaller flats and possess a gross monthly income of S$3,000 or less can sell part of their flat lease to HDB. They will be able to retain a 30-year lease and receive a S$20,000 cash bonus.

The proceeds received by the flat owners will then go into their Central Provident Fund (CPF) Retirement Accounts (RA). They can than use these savings to purchase a CPF LIFE plan to give them a monthly income for life.

Households will receive the full S$20,000 bonus if their top-up to their RAs is S$60,000 or more. If they are unable to hit S$60,000, they will receive a pro-rated bonus of S$1 bonus for every S$3 top-up.

Introduced in 2009 and later enhanced, the scheme provides the elderly the option to age in familiar surroundings, while having a secure future with monthly payouts.

But the scheme has seen a low take-up rate, with only 326 households signing up for it since it was enhanced in February last year. Parliament discussions this year regarding the scheme have centred round expanding the criteria to include bigger flats, and more detailed plans for elderly who outlive the 30-year lease.

In parliament last month, Manpower Minister Tan Chuan Jin noted that the majority of seniors “who take advantage of programmes such as the Lease Buyback Scheme and the Silver Housing Bonus typically get enough from sale proceeds to top up their CPF accounts to reach the Minimum Sum, with cash to spare”.