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More flexibility planned for lease buyback scheme: Khaw

SINGAPORE — Ahead of expected announcements on details of the expansion of the Lease Buyback Scheme to four-room flat owners, National Development Minister Khaw Boon Wan yesterday hinted at other possible changes to the scheme — namely, allowing home owners to retain a range of leases.

National Development Minister Khaw Boon Wan (centre) hints that home owners may be allowed to retain a range of leases under the Lease Buyback Scheme. Photo: People’s Association

National Development Minister Khaw Boon Wan (centre) hints that home owners may be allowed to retain a range of leases under the Lease Buyback Scheme. Photo: People’s Association

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SINGAPORE — Ahead of expected announcements on details of the expansion of the Lease Buyback Scheme to four-room flat owners, National Development Minister Khaw Boon Wan yesterday hinted at other possible changes to the scheme — namely, allowing home owners to retain a range of leases.

The Lease Buyback Scheme in its current form allows senior Housing and Development Board (HDB) flat owners to keep 30 years of their flat’s lease and sell the rest to the Government, with proceeds used to top up their Central Provident Fund Retirement Accounts for annuity payouts.

Prime Minister Lee Hsien Loong announced at the National Day Rally last month that the scheme, limited to three-room HDB flats or smaller, would be extended to four-room units.

Speaking at a post-National Day Rally dialogue with youth in Sembawang GRC yesterday, Mr Khaw said there is a possibility the mandatory 30-year lease a home owner must keep may be shortened or lengthened to suit the needs of various age groups.

Noting that some groups had discussed the scheme during the dialogue, Mr Khaw said some of the comments were valid. Home owners who come on board the scheme at 65 will be 95 at the end of their 30-year lease and there are “quite a number” of Singaporeans who live beyond 95, making 30 years too short, he said.

On the other side of the fence are comments that “30 years is too long because there could be people coming in at the age of 80 … very few people live beyond 110 years old”.

Musing aloud, Mr Khaw said: “For example, you can extend (the lease retained) from 30 to 35 years — that will bring applicants to the age of 100, which I think is probably sufficient for practically most of the users of this scheme. And likewise, on the other hand, to see how we can shorten the lease so you can have more upfront cash proceeds for those who are 80, 75 years old.”

Mr Khaw said he is actively studying how to introduce such flexibility and hopes to make clearer announcements this week.

At a separate dialogue at Sengkang Community Club — also held to discuss the National Day Rally — Deputy Prime Minister Teo Chee Hean addressed calls by some residents for the scheme to be extended to larger HDB flats or even private property.

Mr Patrick Yeo and Mr Tan Yiam Boh, both residents attending the dialogue, had called for the scheme to be extended to larger flats such as five-room and executive units.

Some residents are reluctant to downgrade to small units and prefer to rent more rooms out, said Mr Yeo.

Explaining the origins of the scheme, Mr Teo, who is also Member of Parliament (MP) for Pasir Ris-PunggolGRC, said it is aimed at helping elderly Singaporeans who are living on their own to continue doing so.

“The three-room flat, well, is a little bit bigger than you need for two people, but is still okay. A four-room flat is a little bigger than that still, because you have two spare rooms for a four-room flat for two people,” said Mr Teo. “Now, you talk about the executive flat. Sometimes, you call it a six-room flat; for two people, that’s really a very, very big flat.”

Owners of such bigger units, he said, could consider other options first instead of the Lease Buyback Scheme. “We don’t need to encourage people who stay in a flat that is really much bigger than (what) they really need.”

For private property owners, Pasir Ris-Punggol MP Gan Thiam Poh pointed out that an option that could be considered is reverse mortgages. Under such arrangements, an owner retains the full lease of his flat, but takes a loan against his unit as collateral and will have to repay the loan with accumulated interest on termination of it or death. In 2006, NTUC Income offered reverse mortgages to elderly Singaporeans, but it was later canned due to limited demand.

In March, Mr Khaw said at his ministry’s Committee of Supply debate that the Government was starting a study on reverse mortgages as a means for the elderly to retire comfortably. ADDITIONAL REPORTING BY XUE JIANYUE

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