Elderly flat owners can consider the new monetisation scheme that is announced by the Prime Minister on 19 August 2007 during the National Day Rally. The details of the scheme are being worked out and will be made known nearer the implementation date.
Under the new scheme, Lease Buyback Scheme (LBS), HDB will buy back the tail end of the lease of a 2-room or 3-room flat at market value from the elderly flat owners (aged 62 and above) who have enjoyed only one housing subsidy or none at all; leaving them with a shorter lease of 30 years on the same flat. The flat owners will receive the payout in three parts:
- A lump sum $5,000 upfront upon joining the scheme; the remainder will be used to purchase an Immediate Annuity from CPF Board to provide a monthly stream of income for life
- Monthly payments for 30 years as a steady stream of income; and
- Longevity insurance that will pay out a monthly allowance for as long as they live.
The actual amount “unlocked” by the buyback will depend on each flat’s market value. In addition to the payout from the flat, the flat owner would also receive a subsidy from the Government. In addition to the value of the housing equity unlocked from the shorter lease, there is a generous subsidy of $10,000 from the Government.
Starting from 1 Mar 09, HDB will accept applications for the Lease Buyback Scheme (LBS). This was announced by the Minister for National Development, Mr Mah Bow Tan, in Parliament yesterday.