Schemes to monetise flats 'can be simpler'

By Charissa Yong, The Straits Times, 7 Jun 2013

THE need to further simplify schemes to help senior citizens get cash from their flats was underlined by experts at an Our Singapore Conversation session on Wednesday night.

"When you provide schemes to such people, it should be simple to understand and something that they're willing to take on because they trust the counter-party who's providing it," said Professor Joseph Cherian of National University of Singapore Business School.

He was among a dozen property and social welfare experts who discussed how to better reach the elderly and whether there should be new options for them.

Having good schemes in place is important as the population is starting to age, they noted.

According to the Housing Board, elderly Singaporeans rely on the Central Provident Fund (CPF), personal savings and support from their working children to pay for their retirement needs.

Senior citizens who want extra income from their flats have three main options now: Rent out a room or their entire flat, or take up either of HDB's two schemes.

HDB figures show about one-third of its flats, or 254,000, are owned by people aged 55 and older. One in 10 of these owners rents out a room or the whole flat.

The two schemes for the elderly are the Silver Housing Bonus and the Enhanced Lease Buyback.

With the bonus programme, a senior citizen who sells his flat and moves to a smaller one can get a cash bonus of up to $20,000 per household, if he tops up his CPF retirement account with part of the sale proceeds.

With the other scheme, owners of a three-room or smaller flat can sell part of the lease back to HDB for some retirement income, and continue to live in the same flat for the next 30 years.

But these terms and concepts are often hard for the elderly to understand, said the experts.

"Some (elderly) don't understand. If they sell the house, they expect to get the whole lump sum and don't realise they have to put a minimum sum into CPF, said Ms Fiona Hon, a senior care manager from Tsao Foundation, referring to the Silver Housing Bonus.

"So they think they've been cheated and don't like the scheme," she added. The scheme has attracted only 23 applications since it began in February.

The Enhanced Lease Buyback Scheme has received more: 265 applications since February.

To draw more people, she suggested that HDB educate the elderly using real-life examples in the media, or target coffee shops and community centres they frequent.

Most participants also agreed it would be good if the elderly were taught the basics of financial planning to help them manage the cash they got from their houses.

They suggested policy tweaks such as having HDB promise in writing that senior citizens can continue living in their same flats or studio apartments - even if they outlive their 30-year leases.

But there is a potential cause for concern, said DTZ South-east Asia chief operating officer Ong Choon Fah. The monetisation schemes rely on property prices rising. But this cannot always be guaranteed, she said.

Only one in 10 seniors rents out room or flat
Survey shows that many prefer their privacy, seeing subletting as last resort
By Charissa Yong And Daryl Chin, The Straits Times, 7 Jun 2013

JUST one out of 10 elderly Singaporeans rents out a room or their flat - mostly to fund daily or medical costs, according to the first ever survey on the subject carried out by the Ministry of National Development (MND).

The study found there are around 26,000 such subletters on the island - mainly living in three-room flats or smaller.

However, many over-55s prefer to keep their privacy, and social workers and property agents said the figures were down to home owners in that age group seeing subletting as a last resort.

"Most of my clients wouldn't rent out their flats if they can help it," said Ms Fiona Hon, a senior care manager at Tsao Foundation, which focuses on ageing and elder care.

"They worry over their privacy and whether they get a good or bad tenant. They're elderly, how do they get rid of a bad tenant if they get one? So they're very reluctant to sublet."

The figures did not surprise Mr Chris Koh, director of property firm Chris International. "On the ground, that's what we see too."

The study was released on Wednesday night during an Our Singapore Conversation session at the National Library on how the elderly can make money from their homes. It included Housing Board statistics and focus group discussions with real-estate agency heads.

MND also interviewed 1,243 randomly selected elderly flat owners aged 55 or above who live in different flat locations.

Over two-thirds of those who do not sublet said they would not do so even if they found suitable tenants, or got higher rentals.

Other reasons cited were not needing the rental income and security concerns.

Housewife Halimah Yusoff, 68, sublet her three-room flat seven years ago to a couple for about $1,800 a month. She then lived with her daughter. But when she went back, she had to renovate as "things were falling apart".

"I wouldn't do it again. You know some people just don't take care of things when it's not theirs. But the extra income was quite useful at that time," she said.

The survey also showed that just over two-thirds of those who sublet rely on the rental as their chief source of income.

Forty per cent take on tenants primarily to make ends meet, as they need extra income for retirement, medical or other expenses, or are in financial difficulties.

"I rent out my five-room flat simply to ease my financial situation and pay for some of my living expenses. It helps a lot that it gives me $2,600 every month," said semi-retired cashier Ang Liang Buang, 73. He and his wife live with their son in Punggol.

Retired taxi driver Wang Jian Bo, 75, who has been living in a three-room flat with his wife for 30 years, said: "It's too troublesome to downsize and not safe to rent out to strangers. My wife and I get by on savings and $1,000 a month from our four children."

Mr Koh believed more older Singaporeans could let their homes in future, adding: "Considering our low fertility rate, there will be more old people in future and fewer children (for them to depend on)."

Tweak schemes so seniors get more cash

I SYMPATHISE with retirees living in three-room flats who have to endure unnecessary hassles by renting out a room to meet living and medical expenses ("Only one in 10 seniors rents out room or flat"; last Friday).

The Government should give a gentle lift to seniors, who have contributed to Singapore's economic miracle ("Schemes to monetise flats 'can be simpler'"; last Friday).

The Silver Housing Bonus and Enhanced Lease Buyback schemes (LBS) are good concepts to help seniors who fall through the cracks unlock the value from their asset.

But both schemes have not attracted as many of the 254,000 HDB flat owners aged 55 and older as expected.

Perhaps the biggest bugbear is the channelling of net proceeds to top up the Retirement Account and the $139,000 Central Provident Fund Minimum Sum based on today's income level.

This is the wrong yardstick to use for workers whose incomes were earned in the 1960s.

Workers from those times who bought three-room or smaller HDB flats were people whose earnings and savings were limited. Their lifestyle and basic needs are also different from today's workforce. They deserve different kinds of help.

The Silver Housing Bonus scheme is complicated and restrictive. Downgrading involves moving to unfamiliar places, and retiree couples can keep no more than $100,000 in cash to qualify for the $20,000 bonus.

The rest goes to meet the Minimum Sum requirement to buy two CPF Life annuities.

The Government should consider letting couples have extra cash by allowing them to buy one CPF Life annuity that meets their needs.

The enhanced LBS does not favour flat owners. Why should they need to sell the whole lease to the HDB first and then buy back 30 years' lease at the HDB's offered price?

It should be the other way round, where flat owners keep their 30-year lease and sell the tail end to the HDB at higher prices, which would take into account future asset appreciation.

There should also be a clause to say that lessees who live longer than 30 years will be allowed to continue living in the flat.

For the example of retiree Kwek Joo Heng in the article ("Lease buyback scheme leaves retiree $130k richer"; April 14), if the transaction was such that he kept 30 years of his lease and sold the remaining 40 years to the HDB, he would have got more than $170,000.

Paul Chan Poh Hoi
ST Forum, 14 Jun 2013

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