Lease buy-back kicks off next year

Source : Straits Times - 27 Aug 2008

FROM January next year, elderly home-owners of small flats will receive $550 each month if they join a new plan to sell part of their lease back to the Housing Board.

The proceeds from this sale will go to a Central Provident Fund Life annuity, which gives them a stream of monthly payouts for retirement even as they continue to stay comfortably in their homes.

This plan is open to people who are at least 62 years old.

Senior Minister of State for National Development Grace Fu yesterday gave Parliament an update of the scheme, first announced last August by Prime Minister Lee Hsien Loong.

Said Ms Fu: ‘This is really a good solution to cater to a group of the elderly who probably do not have as many options as those who are staying in the bigger flats.’

Their two- to three-room flats are ’sizeable assets which they can monetise’ by turning to the lease buy-back scheme, she added, replying to Madam Cynthia Phua (Aljunied GRC) and Mr Baey Yam Keng (Tanjong Pagar GRC).

She projected that 25,000 households can sign up for it. This represents 70 per cent of the elderly who own two- and three-room flats.

She addressed two common questions.

First, what happens if the flat owner outlives the lease? ‘No elderly will be left homeless,’ she assured the House.

One option is to buy a lease extension. But not all can afford this, so the HDB will assess the housing options of each family and be ’sensitive’ to their financial health, she said.

Next, what happens if an elderly person dies prematurely? In this case, his estate will receive a ‘pro-rated refund on the residual lease’, Ms Fu said.

For the elderly, studio flats are another option and the Government is building more of these, she noted in her reply to Madam Phua.

Ms Fu said: ‘In many of the new estates we are building, two-room flats are available.

‘In fact, they are not as well subscribed as the bigger flats so once the flats are ready, they are available straightaway.’

MONETISING ASSETS

‘This is really a good solution to cater to a group of the elderly who probably do not have as many options as those who are staying in the bigger flats.’ - Ms Grace Fu, Senior Minister of State for National Development, on the new plan allowing the elderly to sell part of their lease back to the Housing Board