This article was originally published on 14 September 2018 and updated to reflect the latest information. Additional reporting by Angela Koo.
Following Prime Minister Lee Hsien Loong’s National Day Rally 2018, the Housing Development Board (HDB) announced that the HDB Lease Buyback Scheme will be extended to all HDB flats from 1 Jan 2019, giving more Singaporean homeowners the option to receive cash bonuses and greater cash payouts from CPF LIFE, in exchange for selling the tail end of their HDB flat’s leases that they are unlikely to use (statistically, due to life expectancy).
The HDB Lease Buyback Scheme could be a useful way for boosting your CPF Retirement Account savings to enjoy greater monthly payouts, without needing to sell your home and “right size”. We take a look at how it works to help you decide whether it is something you or your aged loved ones would want to consider.
Read Also: Early Retirement In Singapore: Here Are 5 Important Questions You Need To Answer Today
What Is The HDB Lease Buyback Scheme?
The HDB Lease Buyback Scheme allows elderly homeowners who wish to continue to live in their HDB homes, while unlocking the value of their properties and receive cash and higher CPF LIFE payouts in return for the extra years of lease that they are unlikely to need.
The scheme was launched in 2009 and enhanced in 2015 with a higher income ceiling for eligibility, allowing households with multiple owners to receive more cash upfront, and giving homeowners a choice of lease durations to retain.
How Does The HDB Lease Buyback Scheme Work?
Your household will first need to choose the length of lease to retain, based on the age of the youngest owner. This determines the amount of net proceeds you can unlock.
|Age Of Youngest Owner||Choice Of Lease To Retain|
|65 to 69||30, 35|
|70 to 74||25, 30, 35|
|75 to 79||20, 25, 30, 35|
|80 and above||15, 20, 25, 30, 35|
When you sell your remaining lease to HDB, you’ll receive a cash payment upfront depending on your flat size (ranging from $10,000 to $20,000) and the net proceeds will be used to top-up your CPF Retirement Account (RA).
Cash Payment: Your household will receive the full cash payment as long as the total top-up to the flat owners’ RA is $60,000 or more. If you are unable to do so, you will receive a pro-rated bonus of $1 for every $2 CPF top-up for 3-room or smaller flats or $1 for every $4 CPF top-up for 4-room flats or $1 for every $8 CPF top-up for 5-room flats or bigger flats.
CPF Top-Up: For flats with one owner, they will need to top-up their RA to their age-adjusted Full Retirement Sum (FRS). For households with multiple owners, each co-owner will need to use their share of the proceeds to top-up their RA to the current age-adjusted Basic Retirement Sum (BRS). Any excess proceeds after you topped-up your RA can be withdrawn in cash, up to a maximum of $100,000. Additional proceeds beyond $100,000 will need to be used to further top-up homeowners’ respective RA to the current FRS.
Read Also: Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55
Eligibility For HDB Lease Buyback Scheme
The eligibility criteria has been greatly expanded over the years, allowing more Singaporeans the option to participate in the scheme.
|Age||All owners must be at least 65 or older|
|Citizenship||At least one owner must be a Singaporean|
|Income||Have a gross monthly household income of $14,000 or less|
|Property Ownership||No current ownership of second property|
|Minimum Occupation Period (MOP)||All owners must fulfilled the MOP of 5 years|
|Minimum Lease||There must be at least 20 years of lease remaining|
Conditions You Should Know About
You cannot sell or sublet your flat: Once you enrol in the HDB Lease Buyback Scheme, your lease is non-transferable in the open market, which means you cannot sell or sublet your flat. If you wish to end your lease prematurely, you would need to return it to HDB and receive a pro-rated refund based on the remaining lease.
If you outlive your lease: The government has made assurances that you will not be left homeless. HDB states that they will “look into the circumstances of your case and consider your family support, health condition, and financial status to determine the appropriate housing arrangement for you”.
This is pretty vague so if I were an old person, it might be quite disconcerting. Continuing to live in your HDB flat would obviously be best, but there are no indications that this will be allowed.
If you pass away during lease period: your surviving spouse or chold who is living in the flat can continue to live in the flat for the balance of the lease period or return the flat to HDB and receive a pro-rated refund based on the remaining lease.
Read Also: CPF LIFE Escalating Plan: What You Need To Understand About The Latest CPF LIFE Plan Before Opting For It
Application Procedure And Fees
If you’ve carefully considered and would like to make use of the HDB Lease Buyback Scheme, study the application procedure in detail first.
These are the fees payable for your application under the current Lease Buyback Scheme: an admin charge of $100, which will be deducted from the proceeds from the sale of the tail-end lease and legal fees of between $300 to $500, which will be deducted from the proceeds from the sale of the tail-end lease.
HDB Lease Buyback Allows You To Continue Living In Your Own Home Instead Of Moving In Your Old Age
For many Singaporeans, our homes are our largest asset and unlocking its value will help in our retirement adequacy. If the idea of moving in your old age or downsizing to a 2-room Flexi flat or a Community Care Apartment doesn’t sound appealing to you, selling your lease back to HDB can be worth considering.
Read Also: 5 Things To Know About HDB Community Care Apartments
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