Lease Buyback Scheme
Encyclopedia
Lease Buyback Scheme is a monetisation option introduced by Singapore
to help elderly households in three-room or smaller flats
unlock their housing equity to meet their retirement needs. It was announced by Singapore’s Minister for National Development
, Mah Bow Tan
, in Parliament on 6 Feb 2009, and the Housing and Development Board (HDB) has started accepting applications for LBS from 1 Mar 2009.
The scheme involves HDB buying back the tail-end of the lease of the flats, each HDB flat has a 99-year lease from date of completion, leaving the elderly with a shorter 30-year lease. In addition to the value of the housing equity unlocked from the shorter lease, the Government will top up the amount with $10,000. Of the total value, $5,000, will be given upfront as a lump sum while the remainder will be used to purchase an Immediate Annuity from the Central Provident Fund
(CPF) Board to provide a monthly stream of income for life.
The payout under the Annuity is in addition to whatever source of income the elderly already have, e.g. CPF savings, investments, insurance, rent from subletting of rooms etc. The shorter 30-year lease term is non-transferable in the open market. If it needs to be terminated prematurely, the lessee or his beneficiaries will receive a pro-rated refund on the residual lease.
There are about 34,800 households who are eligible for the LBS in Singapore as of Apr 2010.
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
to help elderly households in three-room or smaller flats
Apartment
An apartment or flat is a self-contained housing unit that occupies only part of a building...
unlock their housing equity to meet their retirement needs. It was announced by Singapore’s Minister for National Development
Ministry of National Development (Singapore)
The Ministry of National Development is a ministry of the Government of Singapore that directs the formulation and implementation of policies related to land use planning and infrastructure development...
, Mah Bow Tan
Mah Bow Tan
Mah Bow Tan is a politician from Singapore. A member of the governing People's Action Party , he is currently a Member of Parliament representing the Tampines Group Representation Constituency...
, in Parliament on 6 Feb 2009, and the Housing and Development Board (HDB) has started accepting applications for LBS from 1 Mar 2009.
The scheme involves HDB buying back the tail-end of the lease of the flats, each HDB flat has a 99-year lease from date of completion, leaving the elderly with a shorter 30-year lease. In addition to the value of the housing equity unlocked from the shorter lease, the Government will top up the amount with $10,000. Of the total value, $5,000, will be given upfront as a lump sum while the remainder will be used to purchase an Immediate Annuity from the Central Provident Fund
Central Provident Fund
In Singapore, the Central Provident Fund is a compulsory comprehensive savings plan for working Singaporeans and permanent residents primarily to fund their retirement, healthcare and housing needs. It is administered by the Central Provident Fund Board, a statutory board under the Ministry of...
(CPF) Board to provide a monthly stream of income for life.
The payout under the Annuity is in addition to whatever source of income the elderly already have, e.g. CPF savings, investments, insurance, rent from subletting of rooms etc. The shorter 30-year lease term is non-transferable in the open market. If it needs to be terminated prematurely, the lessee or his beneficiaries will receive a pro-rated refund on the residual lease.
Advantages
LBS is designed to let elderly residents to age in place comfortably. They can continue to stay in their flats, in the same familiar environment and community that they have grown accustomed to. Besides, they will have a steady source of monthly income for the rest of their life. This is particularly helpful to low-income elderly households of smaller flats who are unable to take advantage of other monetisation options, e.g. downgrading to a smaller flat elsewhere, or renting out the flat.Eligibility
LBS is available to Singapore citizens owning three-room or smaller HDB flats. They must also meet the following criteria:- Age of youngest lessee is 62 years or older;
- Household income of S$3,000 or less;
- Have not owned or currently own a private residential property;
- Have only enjoyed one housing subsidy;
- Do not have any outstanding loan on their flat that exceeds $5,000 unless they have minimum proceeds of $60,000 for the purchase of an Immediate Annuity under CPF LIFE;
- Have owned the existing flat for 5 years or more.
There are about 34,800 households who are eligible for the LBS in Singapore as of Apr 2010.