Proceeds used to pay for annuity from CPF Board
DRAWN by the promise of an income for life, caretaker Adali Sadap, 74, was one of several Ang Mo Kio residents who signed up for the HDB's Lease Buyback Scheme yesterday.
About 200 elderly Singaporeans in all have taken up the offer since its launch last month, Prime Minister Lee Hsien Loong said at a roadshow pitching the scheme to his constituents.
Those who qualify will sell to the Housing Board (HDB) the tail-end of their lease at market rate, and the proceeds will be used to buy an annuity from the Central Provident Fund Board.
This annuity could give Mr Adali and his wife, who is 69, a total of about $600 a month throughout their life.
'I consulted my family, and they all feel the scheme is beneficial to us,' said the father of 11 who bought his three-room flat in 1981 for $21,900.
It is now worth $248,000, he said, adding that he makes about $600 a month as a mosque caretaker.
The rise in value of HDB homes over time was also noted by Mr Lee in his speech at Nanyang Polytechnic to some 1,000 elderly constituents.
He said the Lease Buyback Scheme was possible because of Singapore's highly successful home ownership programme.
'Even now, in an economic downturn, everybody not only has a roof over their heads, but a property which has appreciated in value over the years,' he noted.
Indeed, some owners of larger HDB homes have asked to be included in the scheme, which is only for owners of three-room or smaller flats.
The Government could consider it later, said Mr Lee, adding that for now, it wants to focus on those who need the scheme most.
The HDB estimates that about 25,000 households qualify for the scheme now.
Around 2,800 are in Ang Mo Kio GRC, and another 800 are in neighbouring Yio Chu Kang, said the Prime Minister.
But he advised the families not to rush into the scheme, saying it was but one option of unlocking their flat's value while keeping a roof over their heads.
'We are not pushing this scheme on residents,' he said, explaining that it was part of the national effort to help the elderly enjoy life in their sunset years without a heavy burden on their shoulders.
Other options to consider include selling or renting their flat and living with their children or renting out a room.
A three-room flat could rent for $1,500 a month, even now, while a room could yield $500 to $600 a month: 'Not bad,' noted Mr Lee.
He urged residents such as retiree G. Yap, 69, who lives alone, to take their time. 'One day, if you need to do it, the scheme will still be there,' he said.
Madam Yap, whose two children live abroad, said: 'I may have to move to an old-age home later, so maybe I should have more cash in hand.
'I have to do my maths first, but it is an attractive scheme.'
Yesterday's session was an HDB effort to explain the scheme, and it has spread the word to about 80 per cent of eligible households. The first group of successful applicants can expect to get the first cash payout next month.
How the HDB scheme works
Singaporeans who own three-room or smaller HDB flats where the remaining mortgage is $5,000 or lower.
They must be aged 62 or older, have a household income of $3,000 or less and owned the flat for at least five years.
They must not own or have owned a larger property. Also, they must have received only one housing subsidy.
What they get
A monthly payout that can range from $470 to $800, depending on their age and the flat's market value.
A $10,000 subsidy: $5,000 in cash and $5,000 towards the Central Provident Fund annuity.
If the owner dies before his remaining lease runs out, his family gets a refund of the balance and the unused annuity.
Source: Straits Times, 20 April 2009