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More options for better-off group besides lease buyback

I refer to the reports “More options in enhanced lease buyback plan” and “Fears raised over better-off group ‘cashing in’” (both Sept 4).

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Wong Boon Hong

I refer to the reports “More options in enhanced lease buyback plan” and “Fears raised over better-off group ‘cashing in’” (both Sept 4).

I am puzzled as to why there is concern that those who are not cash-poor would want to take up a lease buyback plan for extra cash at a price below the market rate.

In the given example, a four-room flat with a 65-year lease, valued at S$450,000, can get only S$190,000 from a lease buyback. The only advantage is that its owners will continue living in the flat for another 30 years, but will be left with nothing after that.

It is wiser to sell one’s flat for S$450,000 and buy a new three-room flat at S$190,000. One would get S$260,000 in return for a smaller flat, which is a reasonable trade-off. After 30 years, one would still own that flat with a 69-year lease remaining.

Even if one does not qualify for a new flat as a second-timer, buying a resale three-room unit is better than a lease buyback. One may not get S$260,000, but S$190,000 is possible, with a flat to live in after 30 years.

And if one does not live longer than expected, the flat would be something to pass on to one’s children.

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