When the income ceiling is raised next April so they become eligible for it, Mr Thomas Wong, 64, and his wife might well take advantage of the Lease Buyback Scheme.
Changes announced yesterday mean they could sell part of the lease on their four-room Bukit Batok flat back to the Housing Board (HDB) in return for something more in their pockets.
"If there is more cash, it will be more flexible for us. We can go for a holiday or invest the money," said Mr Wong, who is self-employed. His wife, 63, is a secretary. They have an adult son.
The couple take home about $3,200 every month. The revamp raises the income ceiling from $3,000 to $10,000.
Property experts say that, like the Wongs, other home owners will be attracted to the scheme now because of the greater cash proceeds promised.
"The most attractive incentive is the greater amount of cash that becomes available by reducing the Central Provident Fund (CPF) top-up to half of the Minimum Sum for co-owners," said PropNex Realty chief executive Mohamed Ismail Gafoor.
"The cash gives you the peace of mind that you have more flexibility with your money."
Agreeing, SLP International Property Consultants head of research Nicholas Mak said this change in the rules would make the most difference for elderly owners who are cash-strapped.
He said: "Those who need money urgently are more likely to join such a scheme, and they wouldn't want to see a large part of their proceeds go into CPF," he said.
From next April, co-owners of a flat will need to top up their CPF Minimum Sum by just half the amount that is now required, giving them more cash in hand.
The revamped scheme also gives owners more options over how much of their lease to keep. Currently, flat owners have to keep 30 years of the lease and sell the rest back to HDB.
Under the new rules, they must sell at least 20 years back to the HDB, but those aged 70 and older can keep just 25 years and sell the rest. Those aged 75 and older may keep just 20 years on their lease. Those 80 or older can choose to keep just 15 years.
All eligible flat owners will be able to keep a new maximum of 35 years on their leases.
"It is definitely something we are interested in," said Mr Wong. "But we might still hold back so we have the option of leaving the flat to our grandchildren."
Other residents, such as taxi driver Tan Ah Tee, also voiced the desire to hold on to their flats as their children's inheritance. "It is very expensive for my son to buy a new flat," said Mr Tan, 65, who lives with his wife, eldest son and daughter-in-law in a four-room flat in Bedok North. "I wish to leave it to my children and the future generations."
National Development Minister Khaw Boon Wan said the issue of bequest boils down to choice, and the aim of the revamp is to give people more options. "Different people have different needs, different preferences," he said. "It also depends on your relationship with your children, and whether you have children.
"I think the key is to make sure there are different kinds of options, and to let people choose."
R'ST Research director Ong Kah Seng said that the scheme's objective is to cater to elderly people who need to and are willing to monetise their property assets, and that this should take "centre stage" over the issue of bequest.
Mr Mak also noted that the value of the balance on the lease would go into a home owner's estate upon his death. He said: "The children may not get the flat, but they will get money from the flat."
This article was first published on September 04, 2014.
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