More cash for elderly downsizing flat or selling lease

PHOTO: More cash for elderly downsizing flat or selling lease

SINGAPORE - Elderly Singaporeans can now get as much as $100,000 in cash, plus up to $20,000 in cash bonuses, if they downgrade to a smaller home or sell the tail end of their Housing Board (HDB) flat lease back to the Government.

The hope is that these payouts will entice more low-income flat owners here to unlock the value of their homes in old age and be better funded for retirement.

The Ministry of National Development (MND) announced these changes to its Silver Housing Bonus and Lease Buyback Scheme on Thursday.

Both schemes are targeted at the lower-income elderly, whom some commentators have termed "asset-rich, cash-poor".

Often, they own the flats they live in, but lack family and financial support, and need more cash to cope with daily expenses.

The Silver Housing Bonus is a new scheme announced in February. It aims to give a $20,000 bonus to elderly home owners who may no longer need a large flat, and choose to downsize.

However, before the scheme was even implemented, it was met with scepticism because rules dictated that to get the bonus, the net proceeds unlocked from the sale of a flat had to be used to top up the CPF Retirement Accounts of flat owners.

Because the top-up had to be sufficient to cover the CPF prevailing Minimum Sum, which currently amounts to $139,000 per person, or about $278,000 per couple, most flat owners would receive very little cash from the downsizing exercise. This, in turn, meant that the "Silver Bonus" of $20,000 was not a strong enough draw, said critics.

MND said on Thursday that after receiving public feedback, it had decided that flat owners should need to top up only $60,000 into their Retirement Accounts per household, and be able to keep the next $100,000 of the net proceeds from the flat sale.

Any proceeds in excess of $160,000 will be used to top up CPF Retirement Accounts.

On Thursday, the Lease Buyback Scheme, implemented in 2009, was also made more accessible.

Under this scheme, elderly flat owners get to live in their homes for the next 30 years, but sell the remainder of their 99-year lease back to HDB. It has not been popular so far, with 466 households opting for it to date.

Previously, all net proceeds from the sale of the remaining lease - save for $5,000 in cash - went into the compulsory purchase of a CPF annuity.

Again, critics said this was not enough of a carrot for flat owners to take up the scheme.

MND said on Thursday it has decided to allow flat owners to keep up to $100,000 of the proceeds in cash, so long as the specified top-up requirement in lessees' Retirement Accounts has been met.

The cash bonus for households has also been doubled - up to $20,000 - and eligibility rules relaxed so that former private property owners and those who have enjoyed more than one housing subsidy can also apply.

"We need to strike a balance between improving retirement adequacy by requiring a meaningful top-up to the CPF, and keeping schemes attractive by allowing adequate cash proceeds," National Development Minister Khaw Boon Wan said on Thursday, giving the rationale for the changes.

Analysts said the schemes would likely attract more takers, now that less cash is locked away in forced savings.

SLP International head of research Nicholas Mak said: "This is a positive step for the elderly who are sitting on their wealth, yet are strapped for cash."

Applications for the schemes will start in February. Financial counselling will be available to those who want to know more. The hotline number is 1800-555 6363.