DETAILS of the new HDB Lease BuyBack Scheme (LBS) which will be implemented next year, were revealed by Minister for National Development, Mah Bow Tan in Parliament on Thursday.

First announced by Prime Minister Lee Hsien Loong during last year's National Day Rally, the scheme aims to help low-income, elderly households monetise their HDB flats to meet their retirement needs.

The LBS scheme will benefit such households that live in smaller flats need help, as they are unable to take advantage of existing schemes to monetise their HDB flats, such as downgrading to a smaller flat, buying a Studio Apartment or subletting a room.

On top of the housing equity unlocked, HDB will provide an additional $10,000 subsidy.

Out of the total amount, $5,000 will be given to the household as an upfront lump sum, while the remainder will be used to purchase a CPF LIFE Plan to provide the owner with a monthly stream of income for life.

The household continues to stay in their flat, which will be left with a 30-year lease.

Monthly Income
The amount of monthly income that an elderly household will receive from the LBS will depend on the market value of the flat, and the amount of remaining lease.

A longer remaining lease will yield a higher monthly income because more housing equity can be unlocked.

The monthly income will also differ by age and gender of the lessee(s) based on the terms of CPF LIFE.

Take for example, a three-room flat with a remaining lease of 70 years and a market value of $200,000.

Under LBS, HDB will buy 40 years of the lease at $87,000, and provide a top-up of $10,000 in Government subsidy.

From the $97,000, the elderly household will receive $5,000 upfront. This leaves $92,000 remaining to purchase a CPF Life Plan that yields a monthly payout for life.

From this $92,000 , a female sole lessee who joins the LBS at 62 will be able to obtain a monthly payout of about $460 for life; while a male sole lessee who joins the LBS at 62 will be able to obtain a monthly payout of about $490 for life.

If the flat is jointly owned by an elderly couple (both 62), they will get individual CPF LIFE plans. The combined monthly income from LBS is about $490.

Eligibility Conditions
To be eligible for the LBS, the following conditions must be satisfied:

The household must be a citizen household living in a three-room or smaller HDB flat.

All lessees must be at the CPF Draw-down-age (currently 62-years old) or older, and the household must not have enjoyed more than one housing subsidy in the past.

The household must not have previously owned a four-room or larger HDB flat, or private residential property, and must have lived in their flat for at least five years.

The monthly household income must not exceed $3,000, and the household must not have any outstanding loan on their flat that exceeds $5,000.

Some 25,000 households are likely to qualify for the LBS. This is 70 per cent of all elderly households in two-room and three-room flats.

The 30-year lease term is non-transferable. If the lessee wishes to terminate the lease prematurely, he can return the flat to HDB and receive a refund for the residual lease pro-rated on a straight-line basis.

If the lessee outlives the 30-year lease, HDB will look into the circumstances of each case to determine the appropriate housing arrangement for them, if they are unable to pay for lease extension.