LEASE BUYBACK SCHEME

LEASE BUYBACK SCHEME

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(Update): **

25.

Assoc. Prof. Dr Muhammad Faishal Ibrahim asked the Minister for National Development (a) if he would provide an update on the take-up of the Lease Buyback Scheme (LBS); and (b) how the LBS has benefited flat owners since its implementation.

Mr Mah Bow Tan: We introduced the Lease Buyback Scheme (LBS) in 2009 to help lower-income elderly with an additional monetisation option. Elderly flat owners of 3-room and smaller flats can sell the tail-end of their flat lease back to HDB, thereby unlocking value from their flats. Elderly lessees who take up the LBS also receive a $10,000 subsidy from the Government(2).

As at 31st December 2010, HDB has received 677 applications for the LBS scheme. 338 cases have been approved. Of these, 321 have started receiving their monthly payouts, while the remaining 17 will receive them by January 2011. The average monthly payout is $622.

One hundred and twelve applications were rejected because the applicants did not meet the prevailing eligibility criteria. Another 50 applications were cancelled by the flat owners after re-consideration. The remaining 177 applications are under processing.

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The LBS is an additional monetisation option for lower-income elderly flat owners in 2- and 3-room flats who may not have the option to right-size to a smaller flat or Studio Apartment. LBS allows them to unlock equity from their flats and purchase an annuity from CPF Board, which will provide them with a lifelong income stream. At the same time, they can also sublet a room if they need extra income for their retirement needs.

Besides monetary benefits, the LBS also allows the elderly flat owner to age-in-place in a flat and neighbourhood that he is familiar with.

HDB has put in place an array of monetisation options for elderly households in different circumstances, ranging from right-sizing to Studio Apartments, to subletting of flats and rooms to Lease Buyback Scheme. Elderly households need to consider carefully their circumstances and preferences in deciding the most appropriate monetisation option for themselves.

(2) In April 2010, the LBS was extended to elderly who previously owned a 4-room or bigger flat but are currently living in a 3-room or smaller flat. The Government subsidy for such lessees is $5,000.

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