The Housing & Development Board (HDB) Lease Buyback Scheme (LBS) is a financial program designed to help elderly Singaporeans monetize their flats while continuing to live in them. It provides an option for retirees to supplement their income during their retirement years without having to sell their homes entirely.
How the Lease Buyback Scheme Works
The Lease Buyback Scheme allows eligible HDB flat owners to sell a portion of their flat’s lease back to the HDB. The minimum lease you must retain is determined by the age of the youngest owner, typically ranging from 15 to 30 years. The remaining lease is then sold to the HDB, and the proceeds are used to top up the owners’ CPF Retirement Account (RA). Any balance after the CPF top-up can be taken as a cash bonus.
For example, if you own a 5-room flat, you can receive up to $7,500 as a bonus, while those with smaller flats can receive higher bonuses, up to $30,000 for 3-room flats. The scheme is designed to ensure that retirees have a steady income while still retaining their home for the rest of their lives.
Eligibility Criteria
To qualify for the LBS, the following conditions must be met:
- At least one flat owner must be a Singapore Citizen aged 65 or older.
- The gross monthly household income must not exceed $14,000.
- The flat must have a minimum lease of 20 years remaining.
- The flat must be fully paid up and cannot be a short-lease flat, HUDC, or Executive Condominium.
Pros and Cons of the Lease Buyback Scheme
Pros:
- Supplementary Income: Provides a source of income during retirement without needing to sell your home.
- Continued Residence: Allows you to stay in your flat for the remainder of your life.
- CPF Top-Up: Enhances your CPF RA, ensuring a steady stream of monthly payouts via CPF LIFE.
Cons:
- No Sale Flexibility: Once you opt for the LBS, you cannot sell your flat in the open market.
- Potential Limited Cash Upfront: Depending on how much you need to top up your CPF RA, the immediate cash you receive might be limited.
Considerations Before Opting In
The Lease Buyback Scheme is a significant financial decision and should be considered carefully. If you do not urgently need the money or if you want to keep the option of selling your flat on the open market in the future, other alternatives, like renting out spare rooms or downsizing, may be more suitable. It’s important to consult with financial advisors and explore all available options before committing to the scheme.
The LBS has grown in popularity, with over 12,000 households opting in since its inception in 2009. It remains an important scheme for those looking to secure a more comfortable retirement while staying in their homes.
