HDB FLATS

HDB FLATS:

(Lease buy-back scheme): 16.

Mdm Halimah Yacob asked the Minister for National Development (a) how many 2-room and 3-room flat owners who are 62 years old and above and who are first-time HDB flat buyers will be eligible for the lease buy-back scheme; and (b) whether his Ministry will consider allowing some flexibility in its implementation so that even those who are second-time buyers of such flats and who are facing hardship will be allowed to benefit from this scheme on a case-by-case basis.

Mr Mah Bow Tan: Sir, based on preliminary estimates, about 25,000 elderly households living in 2-room and 3-room sold flats should be able to qualify for the lease buy-back scheme (LBS). This number is likely to increase in the future as our population ages.

One of the conditions of the lease buy-back scheme is that HDB lessees who have already enjoyed two housing subsidies will not be eligible. Why is this so? Because of the policy of limiting each household to two housing subsidies. We need to ensure that housing subsidies are fairly and equitably distributed among eligible households.

Mdm Halimah asked if HDB will exercise flexibility to extend the lease buy-back scheme to those who have taken two housing subsidies but who are now in financial hardship. As with our other housing policies, HDB is prepared to be flexible in implementation to help those in genuine hardship. But each appeal will have to be evaluated carefully and factors such as whether there is family support available will be taken into account. This is to ensure that the subsidies we offer through the scheme are well targeted at those elderly households who need the additional help.

Mdm Halimah Yacob (Jurong): Two supplementary questions, Sir. First, I would like to ask the Minister, of these 25,000 households, what percentage of the total number of 2- and 3-room flat owners does it constitute? Second, I am happy that the Minister is prepared to consider flexibility on a case-by-case basis. But, in a similar vein, I would like to ask the Minister whether he would also extend that same flexibility to first-time buyers of 4-room flats because the whole idea is actually to assist older Singaporeans to take care of their retirement needs and therefore we should extend it to the smaller flat owners. For the 4-room flat owners, older Singaporeans will fall in that category of those needing assistance for their retirement and income.

Mr Mah Bow Tan: The 25,000 households that I referred to earlier constitute about 10% of the total number of 2- and 3-room households in Singapore. So it is not insubstantial. If I may explain - what is the purpose of this lease buy-back scheme? As we are preparing our population for retirement adequacy, we must recognise that there is a very major asset which many Singaporeans, if not most Singaporeans, own, and that is, their HDB flat.

The value that is captured within this asset is very substantial.

We did a survey about two years ago and the Department of Statistics' figures showed that the average net value - that means after deducting loans and so on - of a typical HDB flat in Singapore was about $154,000. That is overall. For the lower income, it was quite significant too. It was over $100,000. So this value is there.

The challenge for us is to see how we can monetise the flat - unlock the value that is in the flat in order to allow people to provide for their retirement. But an equally important challenge is to see how we can continue to let them have a roof over their heads. We have implemented several options over the last few years in order to help to monetise the flats. For example, studio apartments. These studio apartments are suitable for those who have got larger flats. They can sell their large flats and downgrade to studio apartments. They can then unlock the value of their large flats. Even after they have paid for the studio apartment, they would have a surplus. Those who do not wish to downgrade to a studio apartment, they can downgrade to a 2-room flat or even a 3-room flat if they are living in 4-room or 5-room flats.

This latest proposal - the lease buyback scheme - is another option that we are offering. But because it is such a new scheme, it is important for us to help people to understand this scheme. It is a scheme which, I believe, will be very attractive. We are making it attractive by adding another subsidy to the scheme. But we want to make sure that people understand the scheme. There will be some who will not understand. There will be some who may be misled or whatever. So let us roll out the scheme first to those households who really need the scheme. By this, I mean the lower income households, those who are living in 3-room flats.
Those who are living in larger flats - 4-room or 5-room flats - they have other options, the option of downgrading. They also have another attractive option which is to rent out a room. If a person has a 4-room flat, he can rent out one or even two of those rooms and earn quite a handsome income. A room can now rent for about $450. A person can rent two rooms for about $900-$1,000. Or if he has an opportunity to move in with his children or relatives, he can rent out the whole flat, which again provides him with an additional income of something like $1,500 to $2,000.

Sir, my answer to Mdm Halimah really is: let us implement this scheme first for the 3-roomers. Let us help people to understand the benefits of this scheme, make it popular and then, if necessary, we can start looking at larger flats. Because the 3-room flat households actually have less options, especially the low income ones. Let us concentrate on helping this group first and later on we can consider expanding it to other flat types as well.