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What is HDB Enhanced Lease Buyback Scheme and how does it work?

In your silver years and hoping to boost your retirement funds? One way is to monetise your HDB flat, and a simple and quick way to go about it is to apply for the HDB Enhanced Lease Buyback Scheme (LBS).

Read on to find out more about this scheme and if it will work for you.



What is HDB Enhanced Lease Buyback Scheme?

The Lease Buyback Scheme (LBS) enables you to monetise your flat to receive a stream of income in your retirement years. The bonus is that you can continue to live in it until your lease is up.

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. (For example, if you are 65 years old and there are 65 years remaining on your HDB flat lease, you may choose to retain only 30 years of lease and sell the remaining to HDB.) 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 join CPF LIFE, which will provide you with a monthly income for life.

Here’s an example to illustrate how the LBS works:

Let’s say you and your partner are both 65 years old and jointly own a 5-room HDB flat with no outstanding loan. The balance on your lease is 65 years and the market value of your flat is $520,000. You and your partner choose to keep a 30-year lease and sell the tail-end 35-year lease to HDB for $219,300.

The two of you will receive $109,850 each to top up your CPF. If you and your partner have initial RA balances of $20,000 and $5,000 respectively, you will need to top up $70,500 and $85,500 to reach the current age-adjusted Basic Retirement Sum (BRS) . After the deductions, what’s left for you are cash proceeds of $63,300 and CPF Life payouts of $1,060 per month each.

As your CPF RA top-ups are more than $60,000 in total, you will also receive $7,500 in LBS Cash Bonus.


Who is eligible for the Lease Buyback Scheme?

The following table lists HDB’s criteria for LBS eligibility:

AgeAll owners must have reached the eligibility age (currently set at age 65) or older
CitizenshipAt least one owner must be a Singapore Citizen
IncomeGross monthly household income of $14,000 or less
Flat typeAll flat types (excluding short-lease flats, HUDC, and Executive Condominium units)
Property OwnershipNo concurrent ownership of second property
Minimum Occupation PeriodAll owners have been living in the flat for at least 5 years
Minimum LeaseAt least 20 years of lease to sell to HDB

How to apply for the Lease Buyback Scheme?

Here is an overview of the procedure as well as the fees payable.

  1. Make an e-appointment

You first have to make an e-Appointment with HDB to find out more about the LBS. You may log in either with or without SingPass, and click on “Make a new appointment” > select “Lease Buyback Scheme” > “Enquiry”. On this page, fill in your particulars (if you logged in without SingPass), choose an appointment date and time, and provide your contact details, before clicking on “Confirm”. You will need to attend the appointment with all the flat’s co-owner(s), if any.

  1. Submit your application during your appointment 

On the day of the appointment at the HDB Branch, the HDB will explain the various monetisation options available to you, including LBS. They will also assist you in calculating the estimated total payout and monthly income you may receive under the scheme.

If you decide to go ahead and apply for the LBS, HDB will assist you to make an application.

  1. Valuation and financial counselling session

HDB will appoint a valuer from HDB’s Panel of Private Valuers to conduct a market valuation of the flat, to determine the value of the lease retained by you, and the value of the tail-end lease sold to HDB. When that is done, HDB will then arrange a financial counselling session with you and your family to let you know the actual total payout and monthly income that you will receive under the LBS. During the financial counselling session, you may confirm if you wish to proceed with the LBS.

  1. Signing of legal documents

If you choose to proceed with the LBS, HDB will invite you to sign the legal documents in approximately 2 months. And on the day of the signing, HDB will issue you a cheque for any excess that is above the required CPF RA top-up (if applicable). The LBS bonus will be credited to your bank account and your monthly income will commence in about 1 to 2 months following the completion of the LBS transaction.

Do note that there will be fees payable for your application. These amounts will be deducted from the proceeds from the sale of the tail-end lease:

  • Administrative charge of $100 (inclusive of GST)

  • Legal fee of about $300 to $500; varies according to your flat type and market value of your flat


Disadvantages of HDB lease buyback scheme

The LBS sounds sweet as it is a guided and relatively uncomplicated process. But what are some of its drawbacks?

  1. You may get much less cash in hand than expected

If you opt for the LBS, you will have to first use the money you receive from the sales proceeds to top up your CPF RA to the Full Retirement Sum. Only when that is done can you keep any money that is in excess. If there are two tenants, the sales proceeds will be deducted from twice to top up two RAs, meaning there will be less money to go around.

So unless you already have a lot of money in your RA, the amount of cash proceeds you receive from the LBS may be much lesser than you may have expected. If you need the money for large one-time expenses, this clearly isn’t the scheme for you.

  1. HDB may offer a lower valuation of your flat 

Once you opt in for LBS, your flat is effectively HDB’s and you won’t be able to sell it later on even if a buyer offers you a jaw dropping price.

HDB’s valuation of your lease assumes that the value of your flat decreases over time. It does not take into account potential rises in your flat’s price. So, you may be better waiting it out to eventually sell your house for a higher price on the property market.

  1. Where you’ll live after the lease is up is a question mark

HDB assures you that if you outlive the lease of your flat, you will not be left homeless. On its website, the Board says it will look into your circumstances such as family support, health condition, and financial status, and work out an appropriate housing arrangement with you and your family members.

Even so, when you lose your home, you face an uncertain future. You could end up having to depend on the goodwill of others. That is not exactly the best way to live out your golden years, isn’t it?


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