As of January 1, 2019, the Housing and Development Board (HDB) in Singapore has announced several important changes. One of the biggest novelties focuses on the scope of the HDB Lease Buyback Scheme (LBS). This innovation is making it possible for a bigger number of senior Singapore property owners to apply and get approved for inclusion in the program.
HDB announced in an official release that the Lease Buyback Scheme will be extended to all types of HDB flats.
Until January 2019, the LBS was only available to seniors who owned a four-room or a smaller apartment in a residential property.
The extension is now making it possible for seniors who own larger apartments to also benefit from the LBS. Statistics suggest that nearly 34,000 Singaporean households will benefit from the extension. This way, the number of households eligible for participation in the Lease Buyback Scheme has reached 130,000.
The Lease Buyback Scheme is a monetisation option that senior HDB flat owners can use to earn a stream of income and supplement their retirement savings. At the same time, the senior owner will still get to live in the HDB flat participating in the program.
As per program specifications, a property owner can sell a part of the apartment’s lease back to HDB. At the same time, the owner will retain the length of lease based on the age of the youngest owner. The proceeds generated through participation in the program will be added to the respective individual’s CPF retirement account.
The program was launched back in 2009 and HDB began accepting applications immediately. A review occurred in 2012 and an enhanced LBS was announced. Under the new conditions, eligible elderly households were to receive 20,000 dollars and a bonus when selling the tail-end lease of a four-room or a smaller HDB flat.
Several further revisions took place through the years. The latest one ranks among the modifications having the biggest impact due to the big number of new households that will get to benefit from the LBS.
As of January 1, 2019, senior households in five-room apartments will receive up to 5,000 dollars in a cash bonus when they participate in LBS. This bonus comes on top of the proceeds that senior owners will generate part of their remaining flat lease to the HDB.
The eligibility conditions and the application process remain unchanged, the HDB announced.
The eligibility conditions are well-defined and all of the details are available on the official HDB website.
In order to qualify for participation in the Lease Buyback Scheme, apartment owners have to be Singaporean and the youngest household member should be 64 or older.
There are a few additional eligibility requirements – the household income has to be 10,000 dollars or less, there should be no concurrent ownership or a second property belonging to the household and all owners should have been living in the HDB flat for at least five years.
A final condition exists and it states that the owner should have at least 20 years of lease to sell to the HDB for proceeds.
The application procedure is relatively simple and a few options are available for added convenience.
HDB apartment owners can make an e-appointment. For the purpose, HDB website registration is required. Once a registered user is in their profile, an e-appointment can be scheduled at a suitable HDB branch.
On the day of the appointment, the HDB reps will provide more information about the monetisation options under the LBS and they’ll also provide some assistance for the calculation of the total amount that the apartment’s owner will be entitled to.
Next, the property owner will need to submit their LBS participation application. More assistance will be provided at the HDB branch. Once the necessary documents are submitted, the HDB will appoint a valuer to conduct a market valuation of the flat. Once the value of the lease retained and the tail-end lease to be sold to the HDB are calculated, a financial counselling session will be scheduled. The aim of the session is to shed more light on the full terms and conditions of participating in the Lease Buyback Scheme.
If you are comfortable with the terms and conditions, you’ll be invited to sign the legal documents finalising your participation in the program. The entire process will take approximately two months.
Keep in mind there will be some fees to pay during the application. These include 100 dollars in administrative charge fees and legal fees that can range between 300 and 500 dollars.
Anyone who needs more information about the LBS and the new conditions effective as of January 2019 can call the HDB Branch Service Line at 1800-225-5432. Service reps will be there to answer questions from 8am to 5pm on workdays.
As you’ve understood from the application process mentioned above, a property valuation will have to take place before you receive your BLS bonus.
The valuation accounts for the condition of the HDB flat at the exact moment in time.
If you’re considering a future application, you may want to carry out an HDB renovation before getting started. There are simple and cost-efficient projects to carry out for the purpose of increasing the overall valuation of the property.
Partnering up with experienced Singapore interior design professionals will give you a better idea about the steps worth undertaking before you do your Lease Buyback Scheme application.
Home Guide’s team has the knowledge and the practical experience to guide you through the process of simple residential renovations that will have an optimal effect. Don’t hesitate to contact us today and let us know what you’re trying to accomplish. We will recommend the best improvements based on the specific outcome that you’re hoping to get in the future.
