How much would you save by buying an assisted living HDB flat?

PHOTO: Stackedhomes

If you’re like most Singaporeans, you have at some point tried to plan out your “final home”, the property where you’ll live out your twilight years.

And like most of us, you’ve probably found it quite tricky: is it better to spend a little more on a well-located two-room flat, or do you still need at least a three-room to be comfortable? And which one takes out the least from your retirement funds?

Well the question has come up again in recent days, but with a new potential solution: the first assisted-living HDB flats : a clever bridge between a nursing home, and continuing to stay in your own place.

These assisted living HDB flats will be available as early as the next (February) 2021 BTO launch. If you’re thinking of alternatives like two-room or three-room flats, or even a small condo, here’s how much you could save with the new option:

A basic rundown of the new assisted living care flat

PHOTO: Stackedhomes

The pilot scheme at Bukit Batok, comprises 160 of these special new flats. These units have a total floor space of about 366 sq. ft, about the same size as a studio apartment.

The flats are only available to those aged 65 or above. The lease on the flats range from 15 to 35 years, and you must pick a sufficient lease to last until you (and any other owners) reach the age of 95.

The flat prices vary based on lease, as follows:

Note: all prices are estimates as show by HDB at the time of writing

Lease Price
15 years $40,000
20 years $48,000
25 years $55,000
30 years $60,000
35 years $65,000

Besides the price of the flat, there is an additional fee for assisted living services. It’s not possible to tell you exactly how much this will cost; it’s a combination of a basic service package (mandatory), along with optional services you may need; such as laundry or social day care.

There’s an online calculator where you can get an estimate.

PHOTO: Stackedhomes

The basic service package includes the communal activities, 24-hour emergency response, regular health check-ups, and basic home maintenance.

The cost of the basic package is as follows:

Lease Price
15 years $22,000
20 years $29,000
25 years $39,000
30 years $47,000
35 years $59,000

Most elderly people will probably need extras like laundry services, meal deliveries, etc., so do brace for higher overall costs compared to the above.

There is no financing for the assisted living HDB flats, but you can opt for upfront or partial payment.

Note that the flat price ($40,000 to $65,000) can be paid with any combination of cash or CPF – so you can pay for all of it through CPF alone. However, for the basic services package, you can either (1) pay all of it upfront in cash, or (2) partially pay an amount upfront, and then make monthly payments upward of $50.

How much do you save compared to other options?

Note: Two-room flats can be bought on either 99-year leases, or shorter leases such as 40-years. The last available price for 40-year lease flats was in the 2019 in Kempas, which we use as our point of reference.

Price data for three-room flats and condos from 99.co.

Assisted Living Flat (excluding service fee) Short lease two-room flat Three-room resale flat (Bukit Batok)* Bukit Batok single-bedder condo units* Average Nursing Home Prices
Approx. total price $65,000 From $117,000 for 430.5 sq. ft. $270,637 $663,923 Starts from $1,500 per month excluding subsidies (around $630,000 for 35 years)
Est. Price PSF $177.59 $271.77 $419.07 $1,475.38
Approx. floor space 366 sq. ft. 387.5 to 484 sq.ft. 645.8 to 700 sq. ft. 450 to 500 sq. ft.
Lease 35 years 40 years Whatever is left of its 99-year lease when you buy it Whatever is left of its 99-year lease, unless it happens to be a freehold condo
Rental income Cannot rent out Cannot rent out $1,626 per month, if you have somewhere else to stay* $1,965 per month, if you have somewhere else to stay*
Amount saved by getting an assisted living flat N/A Save up to $52,000 Save up to $205,637 Save up to  $598,923 Save up to  $565,000 over 35 years

You’ll notice one of the details left out is the impact of resale gains.

This is because assisted living HDB flats and 40-year lease flats cannot be resold. In the event that you don’t need the flat (e.g. an unexpected inheritance or gift of a property), it will be reacquired by HDB at what they deem to be a fair price.

However, this means one of the factors to consider is that you don’t have a continually appreciating property as a legacy. There’s also no option to downgrade once you’re, say, 70 or 75 years, should you find passions to pursue later in life.

Another important factor is the lack of available financing

Assuming you’re 65 (the qualifying age to buy an assisted living flat), you will generally be too old to get a home loan. This means the entire amount will have to be paid upfront.

This adds another dimension to your cost considerations: cashflow. Even if it’s within your means to buy, say, a condo at this amount, it’s best to consult a financial professional. Remember it can take a long time to sell a property, so you don’t want to end up with no cash in an emergency.

In any case, the savings above are so significant, the assisted living flats seem a sure-fire choice for the majority of elderly Singaporeans.

The only thing that might stop the elderly from choosing them are non-financial factors, such as wanting to live near grandchildren, or being deeply settled into a community of nearby friends.

That said, there’s a small irony here, with regard to lifestyle.

Seniors who are still active, and who love to go out, travel, etc. might get more out of assisted living flats than their actual homebound counterparts: the larger savings could mean more lavish retirement choices.

Conversely, those who are truly home bound might prefer a larger property instead.

To date, there’s only been one private property development that’s targeted at the senior demographic

A while ago, we touched on The Hillford – a private “retirement resort” with a 60-year lease (although a lot of young buyers, far from retirement, snapped up units as the single bedders started from $388,000 ).

As Singapore becomes an ageing society, we’re likely to see more properties catering toward the elderly.

Hopefully, the private homes market will keep pace with innovations in public housing. At present this is just happening – The Hillford is the only one of its kind that we’ve seen, and the saying that shoebox units are “good for retirees” is becoming a sales cliché.

This article was first published in Stackedhomes.