Lease Buyback Scheme to benefit the elderly
Some 25,000 households – or 70 per cent of elderly two and three-room flat owners – will qualify for the Housing and Development Board’s (HDB) new Lease Buyback Scheme (LBS) that kicks off next year.
The HDB will buy back the tail end of the flat’s lease from elderly owners at market value, so that they can “unlock” the value of their flat. The lessee would be left with just 30 years of lease to his or her flat.
First announced by Prime Minister Lee Hsien Loong at the last National Day Rally, details of the LBS were unveiled in Parliament yesterday by National Development Minister Mah Bow Tan.
In addition to the equity from the selling of part of the flat’s lease, the HDB will provide a subsidy of $10,000. However, only $5,000 will be paid upfront in cash. The remaining equity will be used to pay the CPF Life annuity scheme that provides monthly payouts for life.
“I believe that the LBS, together with CPF Life, will substantially improve the financial situation of lower income elderly households,” said Mr Mah. “In particular, many of today’s elderly do not have much in their Retirement Accounts.”
But not every HDB lessee qualifies for the LBS. The scheme is restricted to those aged 62 and above who live in three-room or smaller flats. They must have enjoyed at most one housing subsidy and have a household income of less than $3,000. They must also not have bought bigger housing types before. Furthermore, their outstanding housing loans must not be more than $5,000 and they must have stayed in the flat for at least five years.
If the lessee decides to terminate the 30-year lease, there will be a pro-rated refund from the HDB. And if he or she outlives the 30-year lease, the HDB will look into the individual’s circumstances to determine an appropriate housing arrangement, if he or she is unable to pay for lease extension.
“I want to assure them that they will have a roof over their heads, if they outlive their LBS lease,” affirmed Mr Mah.
Jurong MP Mdm Halimah Yacob said the HDB needed to reach out to the elderly who are eligible for the LBS.
She had earlier raised concerns about how the annuity scheme would exclude a quarter of CPF members, those who have less than $40,000 in cash in their CPF accounts – the “very folks who need such protection the most”.
Source : Today – 29 Feb 2008