Govt 'considering' lease buyback for bigger HDB flats

By Toh Yong Chuan, The Straits Times, 24 Feb 2014

SENIORS living in bigger Housing Board flats may soon have the option of converting a part of the lease on their flat into cash, to allow them to age in place.

This is after National Development Minister Khaw Boon Wan said yesterday that the Government is considering expanding the criteria for the lease buyback scheme which is currently only for those living in three-room and smaller flats.

He was responding to questions from reporters, on the sidelines of a post-Budget forum.

Although the scheme has not been very popular, Mr Khaw said it provides more options for seniors, and that he had received many requests for four-room and five-room flats to be allowed too. "I do not regard the low take-up rate as a failure. I would just say that what it means is, people are not financially desperate to need to take advantage of those options."

He added: "The options are there for those who need it. But that doesn't mean that we will stop at three-room flats. We can always consider."

The lease buyback scheme, introduced in 2009 and enhanced last year, lets home owners sell part of their lease back to the Government for cash, but this is only for three-room and smaller flats currently.

Some 240 seniors tapped the scheme last year after the rules were relaxed, up from 471 in total between 2009 and 2012.

Mr Khaw also downplayed expectations of a big housing announcement during the Budget debate which starts next week.

"I don't expect major movements for housing... because we have made a lot of big moves during the last two years because that was necessary and urgent," he said. But he added that he is looking at helping divorcees and single parents.

Government Parliamentary Committee for National Development and Environment chairman Lee Bee Wah supports expanding the lease buyback scheme but does not expect it to be popular. This is because most seniors prefer to sell their flats and buy a HDB studio apartment in the same estate.

"Singaporeans prefer to see the cash upfront (after selling the flat)," she said.

Govt may extend buyback scheme to bigger flats
Ministry had received feedback to expand scheme despite low take-up rate
By Amir Hussain, TODAY, 24 Feb 2014

Despite the low take-up rate so far, the Government is considering expanding a scheme that allows the elderly to sell part of their flat’s lease back to the Housing and Development Board (HDB).

National Development Minister Khaw Boon Wan said yesterday his ministry is looking to extend the Lease Buyback Scheme to those living in four-room and five-room HDB flats.

Speaking to reporters on the sidelines of a dialogue session with grassroots leaders on the Budget, Mr Khaw was responding to questions on what to expect at his ministry’s upcoming Committee of Supply (COS) debate next month.

While he said there would be no major changes in housing policy — given the “big moves” already made over the last two years — his ministry is looking at helping the elderly monetise their homes. It is also looking at doing more for second-time home buyers, such as divorcees with children and single parents.

The Lease Buyback Scheme, introduced in 2009 and enhanced last year, is currently applicable only for three-room and smaller flats, and has seen a low take-up rate. Last year, about 240 owners made use of the scheme.

Asked about the poor take-up of the scheme, Mr Khaw said it simply meant “people are not financially desperate to need to take advantage of those options”.

Mr Khaw also said while downsizing had practical benefits, residents do not want to move from their current neighbourhoods due to their emotional attachment.

Mr Khaw noted, however, that he had received feedback from four- and five-room flat residents requesting to get on the lease buyback scheme.

Head of Consultancy and Research at SLP International Property Consultants Nicholas Mak said with the lease buyback value for bigger flats worth more than that for smaller flats, the scheme could interest some owners, in particular, those who are asset rich but cash poor.

“So maybe they bought a bigger flat, they put in a lot of their life savings into that bigger flat … but they need the money because lifespan is longer and their CPF may not be enough to meet their retirement needs, so I guess this (scheme) is helpful as a way for the Government to help people in these circumstances,” said Mr Mak.

Managing Director of Chesterton Singapore Donald Han said extending the scheme to bigger flats would see a higher take-up rate.

“If you cast the net a bit wider to capture the four- and five-room flats, I think that would probably see a greater participation amongst those who are in need for cash,” he said.

Noting that the take-up rate for Build-To-Order flats have started to stabilise, Mr Han also felt that it is an “opportune” time for the HDB to tackle housing hardships felt by minority groups such as divorcees and single parents.