RETIRED taxi driver Chia Boon Chuan was all smiles yesterday as he became one of the first home owners to receive a payout from the Housing Board's new Lease Buyback Scheme (LBS).
The 68-year-old bachelor has been living alone in his two-room Queensway flat for more than 40 years. With no children to provide financial support, he has been dipping into his savings and annuities for the past eight years.
Now, under the LBS, he has received a $5,000 upfront payment and will be paid more than $400 a month for the rest of his life, in exchange for the tail-end of the 99-year lease of his flat.
'I'm very, very happy,' Mr Chia said. 'I even tried to persuade some of my neighbours and friends to apply...I'm saving up my money for a rainy day, but I'll probably buy a laptop later as at the moment I've no computer.'
Five other home owners also received cheques from the HDB yesterday. A total of 344 applications had been received as of yesterday.
Under the scheme, the HDB will buy back the tail-end of a flat's lease at market rate, leaving the household with a remaining 30-year lease. A $10,000 subsidy will be given and half of this paid upfront. The other half, along with the money for the lease, will be used to buy a new CPF Life annuity in the home owner's name that will provide a monthly stream of income for life.
Applicants have to undergo financial counselling to ensure they understand the terms and conditions of the scheme. For instance, they cannot bequeath the flat to their children.
The LBS targets those without the option of living in a rental flat, downgrading to a smaller flat, sub-letting their entire flat, or relying on family support, said Mr Tay Kim Poh, HDB's chief executive.
He explained: 'The applicants (so far) are...mostly retirees who don't have other sources of incomes. Most of them are living (only) with their spouse, so in that sense they do not get much family support from their children.
This is a good scheme for them as it provides a steady source of income for their retirement needs. And they can continue to live in the same flat - the same environment which they're familiar with.'
Another of those who received a payout yesterday was retired driving instructor Koh Meng Seng, 78. He thinks the monthly income will enable him to go for a holiday and reduce the financial burden on his son, who gives him $6,000 a year.
Madam Ng Siew Yong, 58, who works part-time at Sheng Siong Supermarket, lives in a Commonwealth flat with her retired husband Ng Tiong Gee, 72. They do not take money from their two sons, both married and with children, as 'they have their own families to raise'.
'I will save this money so that if anything happens, I can use it and won't have to borrow money from other people,' said Madam Ng.
The HDB has been conducting outreach programmes since March to promote the LBS. Mr Tay estimated 90 per cent of the 25,000 low-income elderly residents eligible for the scheme are now in the know. He added that the response to the LBS has been 'encouraging'.
Some residents have requested that the scheme be extended to cover a wider range of flats, including four- and five-roomers.
Mr Tay said the scheme is relatively new, with feedback still coming in, but added that 'we'll have to review and see whether we can extend the scheme to the other groups'.
HOW IT WORKS
THE Lease Buyback Scheme (LBS) was launched on March 1. As of yesterday, the HDB had received 344 applications and given payouts to six households.
- The scheme is available to low-income Singapore citizens who own three-room or smaller flats, with an outstanding mortgage loan of $5,000 or lower.
- Applicants must be at least 62 years old.
How it works:
- The HDB will buy back the tail-end of the flat lease at market rate, leaving the household with a remaining 30-year lease.
- Out of the $10,000 government subsidy given to those on the scheme, $5,000 is paid up front as a lump sum.
- The other $5,000, along with the money for the lease, is used to buy a new CPF Life annuity in the home owner's name.
- The amount of monthly income that a household receives from the scheme depends on the market value of the flat, the amount of remaining lease, and the age and gender of the applicant.
Source: Straits Times, 24 June 2009