Saturday 29 December 2012

Silver Housing Bonus and Lease Buyback schemes enhanced

More cash for elderly downsizing flat or selling lease
By Daryl Chin, The Straits Times, 28 Dec 2012

ELDERLY Singaporeans can now get as much as $100,000 in cash, plus up to $20,000 in cash bonuses, if they downgrade to a smaller home or sell the tail end of their Housing Board (HDB) flat lease back to the Government.

The hope is that these payouts will entice more low-income flat owners here to unlock the value of their homes in old age and be better funded for retirement.

Both schemes are targeted at the lower-income elderly, whom some commentators have termed "asset-rich, cash-poor".

Often, they own the flats they live in, but lack family and financial support, and need more cash to cope with daily expenses.

The Silver Housing Bonus is a new scheme announced in February. It aims to give a $20,000 bonus to elderly home owners who may no longer need a large flat, and choose to downsize.

However, before the scheme was even implemented, it was met with scepticism because rules dictated that to get the bonus, the net proceeds unlocked from the sale of a flat had to be used to top up the CPF Retirement Accounts of flat owners.

Because the top-up had to be sufficient to cover the CPF prevailing Minimum Sum, which currently amounts to $139,000 per person, or about $278,000 per couple, most flat owners would receive very little cash from the downsizing exercise. This, in turn, meant that the "Silver Bonus" of $20,000 was not a strong enough draw, said critics.

MND said yesterday that after receiving public feedback, it had decided that flat owners should need to top up only $60,000 into their Retirement Accounts per household, and be able to keep the next $100,000 of the net proceeds from the flat sale.

Any proceeds in excess of $160,000 will be used to top up CPF Retirement Accounts.

Yesterday, the Lease Buyback Scheme, implemented in 2009, was also made more accessible.

Under this scheme, elderly flat owners get to live in their homes for the next 30 years, but sell the remainder of their 99-year lease back to HDB. It has not been popular so far, with 466 households opting for it to date.

Previously, all net proceeds from the sale of the remaining lease - save for $5,000 in cash - went into the compulsory purchase of a CPF annuity.

Again, critics said this was not enough of a carrot for flat owners to take up the scheme.

MND said yesterday it has decided to allow flat owners to keep up to $100,000 of the proceeds in cash, so long as the specified top-up requirement in lessees' Retirement Accounts has been met.

The cash bonus for households has also been doubled - up to $20,000 - and eligibility rules relaxed so that former private property owners and those who have enjoyed more than one housing subsidy can also apply.

"We need to strike a balance between improving retirement adequacy by requiring a meaningful top-up to the CPF, and keeping schemes attractive by allowing adequate cash proceeds," National Development Minister Khaw Boon Wan said yesterday, giving the rationale for the changes.

Analysts said the schemes would likely attract more takers, now that less cash is locked away in forced savings.

SLP International head of research Nicholas Mak said: "This is a positive step for the elderly who are sitting on their wealth, yet are strapped for cash."

Applications for the schemes will start in February. Financial counselling will be available to those who want to know more. The hotline number is 1800-555 6363.

More help for seniors to monetise their flats
By Daryl Chin, The Straits Times, 28 Dec 2012

THE Housing Board is stepping up efforts to help the elderly understand the various monetisation options available to them, including the two schemes which were tweaked yesterday following public feedback.

It will mail out brochures on the Silver Housing Bonus and the Lease Buyback Scheme, and hold financial counselling sessions at its branch offices for those who want to know more. A video will also be produced, to be broadcast in locations frequented by seniors, such as polyclinics.

Elderly flat owners who could benefit from the revised schemes said the changes would make them redo their sums, although they would not be too hasty in deciding as they wanted to understand the schemes better.

Both schemes, which target those earning $3,000 and below, will now require home owners to put less of their flat's sale proceeds into their Central Provident Fund (CPF) accounts, and will give out more cash upfront.

It is hoped that this will enable more Singaporeans like Mr Teo Kim Siang to take advantage of the schemes.

The 63-year-old security guard has been living alone in his three-room Hougang flat for the past 25 years since his mother died. He is now applying for the Lease Buyback Scheme, which allows him to continue living in his flat for another 30 years, and get the remainder of his flat's lease purchased at market rate by the Government.

The net proceeds will then be used to top up his Retirement Account, and he will get $20,000 in cash. Mr Teo said: "I am not an investor, so it is better for me to get some cash now, and leave the rest in my Retirement Account."

Others, like Madam Indarani, 56, who goes by only one name, said they needed more time to suss out their options.

The 56-year-old logistics supervisor is considering the Silver Housing Bonus and downsizing her five-room Bukit Batok flat, as her adult children have either moved out or are overseas.

"The cash is very welcome because medical expenses climb as we get older, but I have not found a suitable flat worth leaving this one for yet," she said.

Those who opt for this scheme can get a $20,000 bonus, on top of a share of the net proceeds of the flat.

ERA Realty key executive officer Eugene Lim said that although the schemes are more attractive now, it is unlikely that the elderly will take them up in droves.

"The elderly are most times sentimental, and many would not want to leave the neighbourhood they are familiar with," he said.

Mr Chris Koh, director of property consultancy Chris International, said the Silver Housing Bonus was likely to be the more popular option. "Having less money tied up in forced savings and more cash upfront could nudge the elderly towards monetising their larger flats, but at the same time also allow them to gain a smaller asset to hold on to."

But he acknowledged that there would be some who would rather sell their flats on the resale market, cash out and use the money elsewhere. "These are groups that, perhaps, aren't thinking long-term," he said.

SLP International head of research Nicholas Mak said that there are also other options available to the elderly, such as subletting their flats.

"But the downside is that you might have a stranger in your home, or face vacancy risk if the rental market is weak," he said.

Mr Lim noted that if more senior citizens take up the offer to downsize, it could mean more resale flats being placed on the market.

He estimates that the elderly own at least 237,000 flats which are four-room or larger. "This could free up the bigger flats for other home buyers, and also help the supply crunch," he said.

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