Additional CPF Housing Grant For Lower Income To Be Increased To $30,000

Source : The Business Times, 20 Aug 2007

Household income ceiling to qualify for grant will be raised to $4,000

The government will increase the maximum additional Central Provident Fund (CPF) housing grant to the lower income to $30,000 and raise the household income ceiling for the grant to $4,000.

A new scheme will also be introduced to make it easier for older Singaporeans to monetise their Housing Board (HDB) flats.

These were all part of a slew of housing policy changes announced by Prime Minister Lee Hsien Loong yesterday during his National Day Rally speech.

HDB housing policy forms a major pillar of the government’s strategy to narrow the income gap and help the elderly build a retirement nest-egg - major themes in Mr Lee’s speech.

About 85 per cent of Singaporeans live in HDB flats.

Home ownership through an HDB flat is the ‘best form of social welfare for citizens, as it gives every Singaporean a stake in Singapore’s success’, he said.

‘When we help you to buy a house and give you something which is valuable and which is rooted in Singapore, when Singapore grows, property values go up, your flat value goes up.’

To help more of the lower income own their own homes, the cap on the Additional CPF Housing Grant, which was introduced last year, will be raised from $20,000 to $30,000, which is substantial considering that a three-room flat cost $120,000 if bought directly from HDB, said Mr Lee.

More people will also become eligible for the grant as the household income limit will be increased from $3,000 to $4,000, said Mr Lee.

About half of all households here have an income of $4,000 or less.

The prime minister also said that the government will pave the way for elderly Singaporeans to unlock the value of their flats and convert it into a stream of income to supplement their retirement expenses.

The government in 2005 made it easier for the elderly to downgrade to HDB studio apartments sold on a 30-year lease.

An alternative to this will now be offered to elderly Singaporeans - aged 62 and above - living in two or three-room HDB flats, said Mr Lee.

These are the people, unlike those living in bigger flats, who do not really have the luxury of monetising their flats either by renting out a spare room or downgrading to a smaller place.

Under the new scheme, HDB will buy back the tail-end of the lease on their flats and leave them with a shorter lease of 30 years on the same flat.

The flat owner will then receive the payout from HDB in two parts - a lump sum paid upfront and monthly payments for the rest of his or her life which will serve as a form of annuity.

‘A 30-year lease is quite long but we are also studying what happens if it turns out that 30 years is not long enough and have some arrangements if you live longer,’ said Mr Lee.

The Ministry of National Development is looking into this, he added.