Short leases a hit with elderly buyers

Most of the elderly buyers who booked flats under the two-room Flexi Scheme opted for shorter leases, the Housing Board said yesterday.

More than 2,100 - 85 per cent - of those aged 55 and above who bought these two-room Flexi flats since the scheme was introduced in August 2015 chose a shorter lease than the usual 99 years, HDB said in a press release .

The scheme allows elderly buyers to choose from flexible lease options ranging from 15 years to 45 years in five-year increments.

Prices of these flats vary according to the length of the lease they go for, and buyers pay for the unit using cash or their Central Provident Fund savings, instead of a mortgage loan.

When the scheme was announced, HDB gave as an illustration possible price differences for a two-room Flexi flat - a unit could cost around $110,000 for a 99-year lease, and $62,800 for a 40-year lease. A unit with a 15-year lease can go for as low as $36,700.

HDB said the 40-year lease was the most popular option among elderly buyers, with 697 bookings.

The 35-year and 30-year leases were the next most popular options, with 559 and 344 bookings, respectively.

The shortest lease of 15 years attracted just 32 elderly buyers, including one senior citizen who is 95 years old.

Only 366 buyers opted for the full 99-year lease.

A retiree who opted for a shorter lease, who gave her name only as Ms Soon, 70, bought a two-room Flexi flat in Sengkang with a 45-year lease.

Ms Soon told The New Paper yesterday she opted for a shorter lease as it allowed her to save money.

'CHEAPER'

She said: "It does not make sense for me to get a 99-year lease, so I am happy I had the option to get the flat for cheaper.

"I am old and can no longer work, so this kind of flat is a good option."

Since the two-room Flexi Scheme was introduced, 6,070 units have been offered in four sales exercises, and 87 per cent were booked.

Selection for 4,000 more of such units is still ongoing.

Almost half of those who bought these flats were aged 55 and above, while the rest were families and singles.

Mr Nicholas Mak, head of research and consultancy at SLP International, said the flexi-lease scheme would appeal to retirees because it is a feasible option for them to downsize.

"With this flexi scheme, the elderly get to monetise their existing four- or five-room flats by selling it and then buying another one.

"They still get to live in a place of their own," said Mr Mak.

"A lot of money and CPF are tied up in their flat, so by buying small and selling big, they can draw some money out."

According to HDB, these flats have been well-received by buyers, with application rates ranging between 1.2 and 6.1, meaning that up to 6.1 people applied for one unit on average.

In the first sales exercise this year, held last month, HDB said the application rate for two-room Flexi flats was 4.1, with 2,894 applications for 713 units in Punggol.

HDB added that it is committed to launching more Build-To-Order projects with two-room Flexi flats islandwide to provide a wide choice of locations.

This article was first published on Mar 6, 2017.
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