HDB InfoWeb : Lease Buyback Scheme To Benefit More Elderly HDB Households

Date issued : 05 Mar 2010

More elderly households can look forward to benefitting from the Lease Buyback Scheme (LBS). Minister for National Development, Mr Mah Bow Tan, announced in Parliament today the expansion of the LBS, which will make 3,800 more elderly households living in 3-room or smaller flats eligible for the scheme. The changes will be implemented from 1 April 2010.



Background


2 The LBS was launched on 1 March 2009 to help elderly households in 3-room and smaller flats unlock their housing equity to supplement their retirement needs. These households need more help as they are unlikely to be able to take advantage of existing monetisation options, such as right-sizing to a smaller flat or subletting a room. Under the LBS, the elderly will get to continue to live in their homes, while receiving a lifelong income stream.

Expansion of LBS

3 With effect from 1 Apr 2010, the LBS will be extended to the following two groups of elderly households living in 3-room or smaller flats:

a) Those who previously owned 4-room or bigger flats. Although they would have received substantial proceeds from the sale of their earlier flats, some of them could still be in need of help eg. those who had downsized many years ago. These elderly may now apply for LBS, and enjoy a Government subsidy of $5,0001.


b) Those with outstanding housing loan of more than $5,000, but will have minimum proceeds of $60,000 for the purchase of an Immediate Annuity under CPF LIFE if they take up LBS. This allows those with sufficient equity to purchase an annuity plan, even after deducting their outstanding loan of more than $5,000, to benefit from the LBS2.


4 With these changes, the revised LBS eligibility criteria are -


a) Citizen household living in a 3-room or smaller HDB flat;
b) All lessees are at least at the CPF draw-down-age, currently at 62 years old;
c) The household must not have enjoyed more than one housing subsidy in the past;
d) The household must have lived in their flat for at least 5 years;
e) The monthly household income must not exceed $3,000;
f) The household must not have owned or currently own a private residential property; and

g) The household must not have any outstanding housing loan on their flat that exceeds $5,000 unless they have minimum proceeds of $60,000 for the purchase of an Immediate Annuity under CPF LIFE.

5 With the expansion of the LBS, the number of beneficiaries will increase, from the seven in ten to eight in ten elderly households. Under the previous criteria, about 31,000 elderly households in 3-room and smaller flats (or 73% of elderly households in 3-room and smaller flats) were eligible for LBS. With the revision, the number of elderly households that stand to benefit increases to 34,800 (or 82% of elderly households in 3-room and smaller flats), i.e. an increase by 3,800 households (or increase by 12%).


6 An illustration on how LBS would benefit the elderly is attached at Annex A (PDF 45KB).


Enquiries


7 For further information or enquiries, the public can:


- visit HDB InfoWEB at www.hdb.gov.sg


- call the toll-free LBS Hotline at 1800-5556363 or Branch Office Service Line at 1800-2255432 on weekdays from 8.00 am to 5.00 pm


Note:
1 Other categories of LBS lessees who have not previously owned 4-room or bigger flats enjoy subsidy of $10,000.
2 Under LBS, the upfront cash payout is $5,000 and it is used to offset the outstanding loan in the first instance. Therefore, they will not be able to enjoy any cash payout if outstanding loan exceeds $5000.