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Sharp rise in take-up of HDB Lease Buyback Scheme after enhancements

SINGAPORE — Knowing he was going to be laid off due to his age, Mr Abdul Rahman Kemat, 68, decided to act first — sell a portion of the remaining lease on his four-room Housing and Development Board (HDB) flat to the Government, which would yield him a payout of about S$1,000 each month.

HDB blocks in Toa Payoh. TODAY file photo

HDB blocks in Toa Payoh. TODAY file photo

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SINGAPORE — Knowing he was going to be laid off due to his age, Mr Abdul Rahman Kemat, 68, decided to act first — sell a portion of the remaining lease on his four-room Housing and Development Board (HDB) flat to the Government, which would yield him a payout of about S$1,000 each month.

The security officer at Jurong Shipyard, who is expecting to be laid off before March next year, said that the money — which he calls his “pension” — will be helpful in covering his daily grocery expenditure as well as the costs of his hospital visits once every three months at the National University Hospital.

Mr Rahman is among the over 500 households who tapped the Lease Buyback Scheme (LBS) after it was enhanced in April last year. The scheme allows elderly homeowners to sell part of the tail end of their HDB flats’ leases to the Government for income.

Between April last year and March this year, 541 households made use of the scheme. This is a sharp increase compared to the preceding two years before the enhancements, where an average of 247 households each year — 494 households in all — took up the scheme.

When the LBS was first launched in March 2009, only 471 households took part in the scheme over a period of close to four years.

The enhancements introduced last year included extending the scheme to include four-room flats, raising the income ceiling to S$12,000, offering a choice of leases to retain instead of the previous 30-year standard, and allowing households with two or more owners to get more upfront cash.

Mr Rahman, who suffers from high-blood pressure and colorectal cancer, said: “When I found out about the scheme, I think it’s good because every month, they will contribute money to my bank account. So, even if I don’t have the job anymore, it’s enough just for ‘makan’ for me and my wife.” He chose to retain 35 years of his remaining lease.

For retiree Yap Kok Seong, 66, the LBS was the only viable solution for him “to have more savings and convenience”.

“The other scheme like the downsizing scheme is more troublesome. The new flat will be smaller and it will be very troublesome for me to move. It will be harder to adapt to a new environment if I were to move into a small flat,” said Mr Yap, who lives in a four-room flat in Jurong.

According to the HDB, close to half of the 541 households who took up the LBS recently are owners of four-room flats — who previously were not eligible. About 5 per cent of households had income exceeding S$3,000 and nearly half of the households (261) who took up the enhanced LBS chose to retain a lease length other than 30 years.

Applicants’ details are assessed to ensure they meet all the eligibility conditions for the scheme. They are also be provided with personalised financial counselling in the presence of their family members to help them make a more informed decision.

Besides the LBS, elderly homeowners can monetise their flats through other schemes such as subletting a room in their flat, or selling their flats and moving to a smaller flat — for which lower-income elderly households can receive a supplement in the form of the Silver Housing Bonus. ADDITIONAL REPORTING BY CLIFFORD LEE

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