Within three weeks of changes being announced to the Lease Buyback Scheme on Sep 3, the Housing and Development Board (HDB) received 500 queries, almost thrice the number they receive in a typical month. The Lease Buyback Scheme allows eligible seniors to retain part of the lease on their HDB flat, and sell the remainder back to HDB for retirement income.
HDB says it has about 250 officers who are able to provide financial counsulting, but seniors have to apply for the scheme first, before such counselling sessions can take place.
Speaker of Parliament and Chairwoman of the People’s Action Party Seniors Group Halimah Yacob said it is a real challenge, building awareness of the scheme.
“In 2009, when they (HDB) introduced the Lease Buyback Scheme, what they did was they had these exhibitions at the housing estates. It is not useful for everyone – because the five-roomers, the executive flat, the private property owners, they are not going to benefit. They had exhibitions at specific areas like Bedok and MacPherson. I think that would be helpful. So that people can come and get a sense, ask the questions they want to ask,” she said.
However Mdm Halimah said there is a larger issue at play – a lack of financial literacy among seniors, although there are existing programmes to help them better manage their money.
“But the problem is – the attendance is not so good. So again, it’s a question of whether they are aware. Secondly, it is a question of whether they feel there is a need for them to attend. So making a compelling case for them to feel that there is a need for them, it is useful for them to attend, I think it is something we need to look at,” Mdm Halimah added.
Mr Mohamed Eusope Kowlan, 78, joined the scheme this year after first getting to know about it five years ago, when the HDB informed him and his wife that they are eligible.
Before the agreement was signed, the couple had to go through financial counselling with HDB. The session laid out for them details such as the estimated proceeds received and CPF top-up requirements.
In their case, the couple’s three-room flat had a remaining lease of 69 years. They retained a 30-year lease on their flat and sold the remaining 39 years to the HDB for S$139,500. The proceeds were then split equally between them, who each get $69,750.
But the couple did not meet the CPF minimum sum of S$138,000 each, and so they used all the proceeds to top up their CPF accounts. As a result, they received an additional S$400 to S$500 each in monthly CPF Life payouts. The couple will get a S$20,000 cash bonus for participating in the scheme.
At the financial counselling sessions, the HDB officer Lina Lim also explained other monetisation options such as subletting and moving into a smaller flat. Mr Eusope said such sessions were helpful.
“The counselling was good, we understood everything. What we did not know, we got to ask about,” he said.
Ms Lim, who is the Principal Estate Manager at HDB’s Bishan Branch, said she draws models to better explain the scheme. “With a diagram, it makes it easier to understand for the elderly,” she said.
HDB said it will step up efforts to help seniors better understand the various ways they can monetise their flats.
Source : Channel NewsAsia – 27 Oct 2014