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Unlocking the value of homes for the elderly

Close to 800 elderly households unlocked value of their homes after they sold part of their flat lease back to the Government under the Lease Buyback Scheme. More could benefit, as the Government is studying how to make it more convenient for retirees to get cash out of their flats.

SINGAPORE: 71-year-old Ahmad Parti is worried about being asset-rich but cash-poor. He is suffering from hypertension and gut problems, but is still working as a part-time gardener thrice a week. 

An HDB scheme provided some relief for Mr Ahmad. Under the Enhanced Lease Buyback Scheme, he and his wife were among the 300 households that unlocked S$44 million from their flats.

At the time of the sale in June this year, their flat at Bedok North Street 3 was valued at S$320,000. The couple retained a 30-year lease on their flat, and sold the remaining lease back to HDB. They got S$134,000 and that was used to top-up their CPF Retirement Accounts. 

The couple then used the amount in their Retirement Accounts to buy a CPF annuity plan, which gives them S$790 cash per month. For participating in the scheme for lower-income households, the couple received a cash bonus of S$20,000. 

"I can use the money for needs like medicine and also for daily use, as my pay is not enough for my daily expenditure and if there is still balance, I will save it for use in the future when I get older and for my medicine," said Mr Ahmad.

More could benefit from the scheme as Mr Ahmad did, as the Government said it is considering extending the scheme to seniors living in bigger flats. National Development Minister Khaw Boon Wan said earlier this year that his Ministry is considering extending the scheme to seniors living in bigger flats. 

Currently, only those who own three-room and smaller flats can qualify for the scheme. But some say retirees could be concerned about outliving the 30-year lease said MP for Chua Chu Kang GRC, Mr Zaqy Mohamad. 

"If you are 80, 90, you can't really buy another flat because you've already used up all the money and you probably can't get a loan. So there's always this concern of: What happens if I outlive my lease?" he said.

According to HDB, such cases will be dealt with individually. Appropriate housing arrangements will also be provided to those who are not able to pay for the lease extension. And for those willing to move to a smaller unit, there is also the Silver Housing Bonus.

Retired nurse Choy Mui Leng tapped on the scheme by selling her four-room flat in Sengkang and buying a three-room in Punggol instead. Said the 66-year-old: "When you are getting old, it is very comfortable to stay in a small apartment, easy to manage." Taking S$68,000 from the proceeds, she topped up the CPF Retirement Accounts for her husband and herself. She gets to keep the remainder - about S$200,000 in cash.

Lower-income elderly can receive up to S$20,000 cash bonus per household if they use some of their net sale proceeds to top up their CPF Retirement Account to receive a monthly income for life. 

The Chairman of the Government Parliamentary Committee for National Development and Environment, MP Lee Bee Wah thinks that the CPF component of these schemes may make it less attractive to some elderly as they will have to use part of their earnings to top up their CPF Retirement Accounts to meet the Minimum Sum.

"Most of the Singaporeans I still find that, they would rather change a bigger flat to a studio apartment and they want to take the one big lump sum, so that they can keep the money," said Ms Lee. 

"A lot of parents - they prefer to have cash for themselves so they don't have to depend on their children or burden their children. So if we can build more studio apartments near MRT stations, near amenities, in the same housing estate. I would think that will be popular," she said.

The HDB said 92 households have benefitted from the Silver Housing Bonus scheme since it was implemented in February last year.

Earlier this year, the Government said it was studying the reverse mortgage scheme as an additional option to help the elderly in Singapore monetise their flat. The scheme allows the flat owner to borrow money using his home as a collateral, and still retain full lease of the flat. The loan is then repaid with interest upon termination of the loan, or death, typically from the sales proceeds of the house.

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