The word is out and it’s official. The Lease Buyback Scheme (LBS) has recently been made more inclusive for senior homeowners who wish to sell the tail-end of their lease back to HDB as it has been extended to all types of HDB flats. Yes, even 5-room flats.
Following this latest development, what do you need to know to have a strong grasp of this HDB scheme?
What is LBS?
To make things simple (and we’re pros at that), let’s illustrate this with a metaphorical scenario. Say you and your partner are both 66-year-old empty-nesters who own a fully paid 5-room-flat that still has a remaining 65-year lease. Under LBS, you can choose to sell 35 years of your lease to HDB, keeping the remaining 30 years of the lease. Since it’s a 5-room flat, the LBS bonus received from the sale will amount up to $5,000. However, 4-room flats can receive up to $10,000 and 3-room flats get $20,000. In addition to the bonus, the proceeds received will also be used to top-up your Retirement Account (RA) to the Full Retirement Sum (FRS). You can only pocket the cash left after the top-up.
Why is LBS important?
Retirement funds – or the lack thereof – is a pressing issue in Singapore as more and more of the elderly population find themselves facing retirement without a financial safety net and/or insufficient funds in their CPF RA. The LBS was then introduced by the HDB as a way to help seniors earn cash without parting ways with their beloved home. Homeowners who participated in LBS can still rent out spare rooms for additional income.
Who is eligible for LBS?
According to the HDB, in order to be eligible for the scheme, you will need to be at least 65 or older, with a gross monthly income of $12,000 or less and have no other property. On top of that, you must have already stayed in your home for at least 5 years and with at least 20 years of remaining lease left to monetise.
Does Ohmyhome’s in-house property agent recommend it?
Ohmyhome CEA licensed agent emphasised that the scheme will not necessarily benefit everyone’s circumstances. He explained that LBS would not be an advantage for empty nesters who are willing part with their home and right-size to a smaller unit. However, it is definitely an avenue to consider should the discerning elders have chronic/mobility-restrictive conditions and/or formed a tightly-knit community amongst their neighbours that would prevent them from buying a new home.
He recommends that it is worth considering other possible options such as right-sizing to a smaller flat if you’re willing to relocate or renting out your property to tenants. After all, you won’t be able to put your flat on the market again after LBS.
Eager to learn more about LBS?
If you need assistance with regards to this scheme, you can call HDB Branch Service Line at 1800-225-5432 between 8:00 am and 5:00 pm from Mondays to Fridays.
Planning to sell your old flat instead?
You can reach us at 6886 9009 or [email protected] to get in touch with our real estate professionals.