ST : Retirement plans affected, but new rules 'make sense'

Sep 11, 2010

EMPTY NEST DOWNGRADER

Retirement plans affected, but new rules 'make sense'

MR CHAN KOK HONG, 64, managing director of property management firm

OLD DREAMS

When the children have grown up and moved out, it's time to downsize. So the Chans reckoned when their elder daughter moved to Australia after marriage and their younger one took off for the United States to study.

They now live in a 4,400 sq ft semi-detached house in East Coast. Mr Chan, whose wife is a finance director, worries about the time when he will have to retire and rely on his savings for daily expenses.

'I thought of buying a five-room flat and renting out my house for $10,000 a month. That would be a nice income.'

Mr Chan was looking to buy an HDB resale flat in Sengkang or Punggol, 'where homes are still cheap', or Woodlands, where he can 'save more money' because he can pop across the Causeway to shop.

Plus, 'you get a lot of subsidies' when you live in an HDB flat, he says cheekily, referring to the financial goodies that are often reserved for public housing residents.

However, they never got down to house-hunting. 'My wife and I just talked about it.'

WHAT CHANGED ON AUG 30

Those buying resale flats will no longer be allowed to own private property - both local and overseas - within the minimum occupation period of five years.

They will have to sell their private properties within six months of buying their flat.

NEW HOPES

They missed the boat. Mr Chan recalls his wife's chiding. 'My wife said, 'See, you just talk and talk, now we can't buy it.''

Now, his best option is to buy a resale executive condominium as he thinks they are most affordable.

All he wants is 'a simple lifestyle', where he has a roof over his head and can 'move around' and do what he likes.

But he thinks the changes 'make a lot of sense'.

'The Government has allowed HDB flats to be used for speculation, which was not its original intention. HDB flats should be kept at a reasonable price for people who need it.'

At the same time, he thinks the Government should make certain provisions for older private property owners like him, who were counting on buying HDB flats as part of their retirement plan.

REAL OPTIONS

Older private property owners will need to do their sums to figure out if they really need to sell their property to fund their retirement needs.

Dennis Wee Group director Chris Koh thinks most retirees who want to move into HDB flats would not be affected much by the changes because they sell their private properties anyway to fund the flat purchase.

'Besides, these retirees will keep the balance money in a bank or use it to buy an annuity,' he says.

In the larger scheme of things, it is likely that the children of retiree downgraders will bear the greater brunt of the changes. Fewer will get to inherit these private properties.