New HDB Flat Buy-Back Scheme For Older Owners

Source : The Straits Times, 20 Aug 2007

They can now sell their flats, without having to move out for another 30 years

ELDERLY HDB dwellers have finally been offered a neat way to swop their flats for more cash in their twilight years.

The Government is introducing a new scheme to buy back the flats of older HDB owners, but they will be allowed to live in the same flats for another 30 years.

The scheme, announced by Prime Minister Lee Hsien Loong last night, involves shortening the leases of these HDB homeowners to 30 years, and then paying them the value of the lease foregone in cash.

It is aimed at helping HDB flat owners unlock the value of their flats. This is important because a flat is often a Singaporean’s biggest asset post-retirement, but he is often unwilling to sell it for cash which he may need in old age.

It will be open to people aged 62 and above who own a two-room or three-room flat, and who have only had ‘one bite of the cherry’, or who have bought only one flat from the HDB previously, PM Lee said.

The new scheme is a major improvement over an existing one. Currently, an elderly HDB dweller can sell his flat and move to a studio apartment with a 30-year lease, which costs at least $60,000.

But many older flat owners are reluctant to uproot themselves and relocate to a smaller flat in an unfamiliar estate.

In the new scheme, they will not have to move out of their current flats. Instead, HDB will shorten the flat’s lease to 30 years and buy back the remaining lease.

PM Lee did not give details of how much HDB would pay for the tail end of the leases that it buys, but he said the payout would be split into two parts.

There will be a lump sum amount paid upfront, while the rest will be paid out as monthly payments for the rest of the owner’s life, like an annuity.

As for what happens if an owner lives for more than 30 years after selling the lease back to HDB, the Ministry of National Development is studying the issue, he said.
Some elderly HDB flat owners told The Straits Times yesterday that they were intrigued by the idea.

‘This is an improvement over the studio apartments because I don’t have to go to a different environment and I don’t have to move to a smaller flat,’ said Mr Steven Lau, 60, an estate agent who owns a three-room flat in Bedok North. ‘It’s just me and my wife. We have nobody to pass the flat on to.’

For Mr Abdul Rahman, 64, the cash that he would get for his flat under the new scheme is a big draw. ‘If my wife and I have financial problems, we can’t ask my children to help us because they have their own problems,’ he said.

‘This would be a good chance to get money. Anyway, after 30 years I don’t know if I’m still living or not.’

Mr Mohamed Ismail, chief executive of property agency PropNex, called the scheme an ‘extraordinary solution to the greying population’.

‘Of all the HDB initiatives announced, this is the most unique and interesting,’ he said. ‘It allows people without enough cash to (get money from) their flats with dignity in their old age.’

The other HDB measures included making it easier for lower-income families to buy HDB flats. The Government upped the maximum amount of CPF Additional Housing Grant by $10,000, and raised the income ceiling so that households earning up to $4,000 can qualify for the grant.

Even more good news was in store for HDB dwellers yesterday, with the HDB upgrading programmes themselves getting an upgrade.

Both the Interim Upgrading Programme (IUP) and the Main Upgrading Programme (MUP) will be replaced by new and improved schemes, PM Lee said.

The IUP will be replaced by the Neighbourhood Renewal Programme (NRP), which will combine two or more precincts in large-scale planning decisions that promise more and better facilities.

As for the MUP, it will be replaced by the Home Improvement Programme (HIP), which will see more practical changes within each flat, such as new doors and better bathrooms. The new programmes will cover nearly all estates in Singapore.

Private estates will also benefit from improved upgrading with a revamp of the Estate Upgrading Programme. More importantly, they will now get Community Improvement Project Committee (CPIC) funds, just like HDB estates, to carry out smaller scale, but regular enhancements.

Housing

Older HDB owners can unlock the value of their flats by allowing HDB to buy back the remaining leases on them. The difference in value will be paid out to owners in both a lump sum and an annuity. And unlike in the past, owners may continue living in their old flats.

PM Lee also unveiled Punggol 21+ - heralding the birth of a new waterside HDB town, in which the estate will be jazzed up to become the new face of heartland living.