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LBS take-up has almost doubled in 2019 says Minister

by • December 23, 2019 • HDB home loanComments (0)301

People are slowly warming up the Lease Buyback Scheme (LBS) boosting the LBS take-up by almost two times in 2019

The Minister for Manpower wrote in his Blog that the LBS take-up has almost doubled to 1,500 in 2019. The Minister, Mr Lawrence Wong, said that LBS take-up was slow because many people are still not that familiar with the Scheme.

To address this, his Ministry had over the last few months, stepped up efforts to raise public awareness about the scheme. This stepped-up effort contributed to better LBS take-up said the Minister.

“The response has been very positive, and take-up for LBS has nearly doubled to around 1,500 households this year.”

LBS take-up

LBS take-up has doubled

Mr Wong revealed in Parliament on Oct 7 that LBS paid out average proceeds of $177,000 per household.

The Minister was responding to a parliamentary question when he answered how much LBS paid out on average per household:

“What are the average amounts of funds that seniors receive in CPF and cash by monetising their HDB flats through the Lease Buy Back Scheme; and how has this scheme boosted their retirement adequacy whilst continuing to live out their retirement in their flats.”

Mr Wong in responding to the question said that LBS paid out average proceeds of $177,000 per household

“The Lease Buyback Scheme (LBS) was enhanced in April 2015 to extend to 4-room flats and provide seniors with more choices in the length of lease to retain. Since then, seniors who took up the LBS received average proceeds of $177,000 per household, including the LBS cash bonus. The proportion of proceeds that they receive in their CPF Retirement Account (RA) and in cash depends on their CPF RA balances before they took up the LBS.”

The Minister said that in general, LBS paid out seniors who had higher CPF RA balances to begin with, a higher proportion of their proceeds in cash. He added that after LBS paid out, “most seniors have enough CPF RA savings to benefit from a lifelong income stream of about $1,000 per month on a household basis under CPF LIFE. Beyond that, most seniors also receive some of their LBS proceeds in cash, in addition to the cash bonus.”

Mr Wong assured the House on Sep 2 that the Housing and Development Board (HDB) will be willing to exercise flexibility on the age requirement for the Lease Buyback Scheme (LBS) for those with long term medical expenses. The Minister was responding to an MP who had asked if “the Government will consider lowering the minimum age requirement for the HDB Lease Buyback Scheme for flat owners who need long-term medical treatment for chronic illnesses.”

In responding to the MP, Mr Wong revealed the average of how much LBS paid out:

“The qualifying age for LBS is set at the CPF Payout Eligibility Age of 65 to allow seniors to receive their monthly CPF payouts immediately after they take up the LBS. Nevertheless, HDB is prepared to and has exercised flexibility on the age requirement for those with long term medical expenses.”

In thanking the MP for his feedback, Mr Wong said that his Ministry will take it into consideration as it continues to review its schemes.

The Minister for National Development, Lawrence Wong, announced in August last year that the LBS will be extended to all HDB flats, including 5-room and larger flats. Writing in his blog, the Minister said that the Lease Buyback Scheme “is a good scheme but it only applies to those living in 4-room or smaller HDB flats” at the moment.

Mr Wong said: “The original thinking was that it would make more sense for those living in bigger flats to right-size. But there are seniors who prefer to age in place. Some also have grandchildren who come over to visit regularly, and would like a bigger space for the extended family.”

Adding: “After considering the matter carefully, I have decided to extend the LBS to all HDB flats, including 5-room and larger flats. This will enable many more Singaporeans to benefit from the scheme.”

At the moment, you are eligible for the Lease Buyback Scheme or LBS as an additional monetisation option if you are from an elderly household living in a 4-room or smaller flat. Through this scheme, you will be able to tap on your flat to receive a stream of income in your retirement years, while continuing to live in it.

You can sell part of your flat’s lease to HDB and choose to retain the length of lease based on the age of the youngest owner. The proceeds from selling part of your flat’s lease will be used to top up your CPF Retirement Account (RA). You can then use your CPF RA savings to purchase a CPF LIFE plan, which will provide you with a monthly income for life.

In order for your household to qualify for the LBS, the following conditions must be met:

Criteria Eligibility
Age All owners must have reached the eligibility age (currently set at age 65) or older
Citizenship At least one owner must be a Singapore Citizen
Income Gross monthly household income of $12,000 or less
Flat type currently 4-room or smaller
Property Ownership No concurrent ownership of second property
Minimum Occupation Period All owners have been living in the flat for at least 5 years
Minimum Lease At least 20 years of lease to sell to HDB

How the LBS Works as illustrated by HDB:

If your household is eligible for the LBS, you will be able to:

  • Sell the tail-end lease of your 3-room or smaller flat, or 4-room flat to HDB, and receive up to $20,000 or $10,000 of LBS bonus, respectively
  • Use the net proceeds to top-up your CPF Retirement Account (RA) to the specified requirements as shown:

For households with 1 owner, he or she will have to use the proceeds to top-up the RA to the current age-adjusted Full Retirement Sum (FRS).

For households with 2 or more owners, each owner will have to use their share of the proceeds to top-up their RA to the current age-adjusted Basic Retirement Sum (BRS).

Flat Owner’s Age
Top-up Requirement for 1 Owner
Top-up Requirement for 2 or more Owners
Eligibility Age (currently 65) – 69
$171,000
$85,500
70 – 79
$161,000
$80,500
80 and above
$151,000
$75,500
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