Sunday, March 15, 2009

Er, what is the Lease Buyback Scheme?

Where do you see this?

On the HDB's website and in newspaper articles.

What does it mean?

The Lease Buyback Scheme, officially launched on March 1, helps the elderly sell their HDB flats to the Government for cash.

The HDB will buy back the tail-end of a flat lease at market valuation, leaving a 30-year lease for the household.

For example, if a flat has a remaining lease of 70 years, the HDB buys 40 years of the lease from the flat owner.

It pays market rate for the lease it buys and this money goes to the new CPF Life annuity in the flat owner's name. He will receive a monthly stream of income for life.

To be eligible, a home owner must be aged 62 and above, own a three-room or smaller flat, have enjoyed only one housing subsidy and have almost paid off his home loan.

He must also have owned the existing flat for five years or more.

If the owner dies before he lives out the 30 years, his family can get a refund of the remaining lease.

If they are the beneficiaries of his annuity plan, they will also be given full refund of the unused portion of his annuity.

Why is it important?

The scheme is useful to our ageing society. Studies have shown that residents in Singapore aged 65 years or older will triple from 300,000 currently to 900,000 in 2030.

Currently, the HDB has a range of options to help elderly home owners unlock their flat value, such as moving in with their children while subletting their whole flat.

Besides offering an alternative option to older Singaporeans, the scheme eases the Government's burden to take care of the needs of the elderly.

So you want to use the term. Just say...

'I'm not really worried about growing old and being penniless. There's always the Lease Buyback Scheme to turn to.'

Source: Straits Times, 15 Mar 2009

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