HDB LEASE BUYBACK SCHEME

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HDB LEASE BUYBACK SCHEME: 6.

Mdm Cynthia Phua asked the Minister for National Development (a) what is the present status of the HDB Lease Buyback Scheme; (b) what is the profile of lessees whom HDB is targeting; (c) what is the target average years of lease that HDB intends to buy back and

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the intended average buy back price per lease year; (d) how is HDB going to address the concern of housing for lessees who outlive the remaining lease and those who live shorter than the remaining lease; (e) what are the common concerns of lessees who have enquired about the scheme; and (f) when is the scheme going to start.

The Senior Minister of State for National Development (Ms Grace Fu Hai Yien) (for the Minister for National Development): Mr Speaker, Sir, I thank Mdm Phua for her question.

The Lease Buyback Scheme (LBS) is targeted at elderly two-room and three-room flat owners. They are generally of lower income, and need more help to monetise their flats to meet retirement needs. As this scheme is subsidised, beneficiaries must not have enjoyed more than one housing subsidy. We project that 25,000 households would be eligible for LBS. This is 70% of elderly households owning two- and three-room flats.

The LBS allows the elderly to receive a lifelong income stream while staying in the same flat. HDB will buy back the remaining flat lease less the first 30 years. Let me explain. In the case of a typical three-room flat with 70 years' lease remaining and, say, priced at $220,000, HDB will buy back the last 40 years of the lease for $95,700, plus $10,000 in subsidy. In other words, about $106,000 in all. Apart from a $5,000 which will be paid upfront as a bonus, the remainder of this amount will be used to purchase a CPF LIFE Plan to secure a lifelong income stream for the flat owner.

A commonly-asked question on the LBS concerns the arrangement should the flat-owner outlive the 30-year LBS lease. I want to assure Mdm Phua that no elderly will be left homeless in this scenario. One option is lease extension.

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However, we do recognise that not all can afford the full price for such extension. HDB will have to assess the housing options available for each case on an individual basis, and be sensitive to the financial, health and family circumstances of the elderly concerned. On the other hand, if the lease needs to be terminated prematurely because the elderly has passed away, his estate will receive a pro-rated refund on the residual lease.

Another commonly-asked question is when the scheme will be implemented. HDB and the CPF Board are working closely together to implement the scheme by early 2009.

Mdm Cynthia Phua (Aljunied): Sir, I have three questions.

(1) With regard to the CPF LIFE of $106,000, what is the monthly instalment payment that the lessee would be able to get?

(2) Since it is to be implemented in January 2009, what are the current interim alternatives that the lessees have? We know that studio apartments are also another alternative for the lower-income families to downgrade to. But currently they are all over-subscribed. What is the HDB's plan on studio apartments?

(3) Is HDB going to build the regular two-room flats? HDB has started to build two-room flats. Are they going to build the regular two-room flats?

Ms Grace Fu Hai Yien: Mr Speaker, Sir, Mdm Cynthia Phua asked about the monthly annuity payment out of the CPF Life Scheme. For the amount that I have quoted, we would expect the figure to be around $550 per month.

On the second question as to whether there are other options from now to the time when the scheme is implemented, we think this is really a good solution to

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cater to a group of elderly who probably do not have as many options as those who are staying in bigger room flats because they are living in a two- to three-room flat. But they do have a sizeable asset which they can monetise. So, we would prefer this group of elderly to wait for another six to nine months or so for this scheme to be implemented. This will be a better option than to monetise and then probably wait for a public rental flat, which is really not meant for this group who have sizeable assets. Of course, studio apartments are another option and we are building more studio apartments. More studio apartments will be in the pipeline.

On the question whether we are building regular two-room flats, the answer is yes. We are building two-room flats. In many of the new estates that we are building, two-room flats are available. In fact, they are not as well subscribed as the bigger room flats. So, once the flats are ready, they are actually available straightaway.

Mr Baey Yam Keng (Tanjong Pagar): Sir, I understand that this Lease Buy-back Scheme is limited to those who enjoy not more than one housing subsidy because it is a subsidised scheme. Can I ask the Senior Minister of State to clarify whether this subsidy refers to the $10,000 top-up subsidy and, if so, will this scheme be extended to others who have enjoyed more than one, but without the $10,000 top-up subsidy?

Ms Grace Fu Hai Yien: Sir, I thank Mr Baey for the question.

It is correct that the reason why we have limited at this point in time to households that have received only one subsidy is because households which have received a second subsidy meant that they would have upgraded. So,

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when they have upgraded from a two- or three-room to a four- to five-room or above, it is likely that they would have more options. For example, they could conceivably rent out a room to allow them to monetise as well. For that purpose, when this scheme is starting up, we are starting with a more targeted group, because this is how we can apply our subsidy to the group that really needs it. So, for the moment, this scheme would come with a $10,000 subsidy. We could consider finetuning the scheme as we go along and after having worked with the scheme for a while.

Mr Speaker: Mdm Phua. Last question.

Mdm Cynthia Phua: Sir, I just want the Senior Minister of State to let us know what is the HDB's building plan in terms of studio apartments and how many are coming on-stream in, say, the next three years, including the two-room flats. If she does not have the answer, please let us know. Basically, this information is really not available in the public domain.

Ms Grace Fu Hai Yien: Mr Speaker, Sir, we welcome Members to file a PQ on that question.