Measures to Help in the Selling of HDB or Private Properties with Less than 60-year Leases

5 Mr Ong Teng Koon asked the Minister for National Development whether more details can be provided regarding the usage of CPF funds for buying HDB flats with remaining leases of less than 60 years.

6 Mr Chong Kee Hiong asked the Minister for National Development in view of the increasing number of elderly Singaporeans with HDB flats and private properties with leases of less than 60 years and the restrictions on the use of CPF for such properties, what measures are in place to assist such owners who have difficulty selling their properties to downgrade to smaller flats or properties.

The Minister for National Development (Mr Lawrence Wong): Mr Speaker, with your permission, let me now take Question Nos 5 and 6 together.

Mr Speaker: Please do.

Mr Lawrence Wong: Mr Speaker, owners of older HDB flats and private residential properties are generally still able to sell their flats in the resale market today. Potential buyers of such properties come from a wide spectrum of life stages and circumstances, and have different housing needs. For example, elderly buyers, or families who are not yet ready to commit to a longer lease, may choose to buy a residential property with a shorter lease. Older residential properties are also attractive to some buyers as they are usually more centrally located and served by established amenities.

MND is also working with CPF Board on how we can provide more flexibility on the use of CPF monies to purchase flats with shorter leases while safeguarding retirement adequacy. We are working out the details of these changes and will share them when ready.

Besides selling their HDB flats or private residential properties, elderly homeowners can consider other monetisation options to unlock the value of their properties. These options include renting out their spare bedrooms or the whole property, or selling back part of their lease to HDB under the Lease Buyback Scheme. As Members would be familiar, we have just recently announced the extension of the Lease Buyback Scheme to 5-room flats and larger HDB flats so that more Singaporeans can benefit from this scheme.

The Government will continue to monitor the market and review the policies to help Singaporeans with their housing monetisation options.

Mr Ong Teng Koon (Marsiling-Yew Tee): I thank the Minister for the answer. Mr Speaker, the way that the percentage of CPF that is allowed to finance a flat with less than 60 years of lease, the number of years remaining when a person has turned 55, divided by the number of years remaining in the lease when he just bought a flat. The last time I looked at it, for a person who is 21 years old, to buy a flat of 60 years left, he can only finance 40%-odd of the lease. Would the Minister consider putting in a higher percentage or can he do something to help the "financiability" of older flats?

Mr Lawrence Wong: Mr Speaker, I thank Mr Ong for his suggestions and comments. As I mentioned, there are a series of CPF rules today pertaining to the purchase of shorter lease flats. First of all, one restriction is that your age and the lease of your flat must meet the minimum of 80 years, which is a point that the Member alluded to. Another restriction is that for a flat with a lease that is shorter than 60 years, there is a proration formula that kicks in. These are the existing rules today. We are reviewing these rules and when ready, we will be able to share with the public what the revised rules are and the timeframe for when the new rules can be implemented, bearing in mind that with CPF changes, it is not just about policy changes, but we also have to amend or update the IT system for CPF. So, it may take some time but we will be able to share when we are ready with our review.

Mr Pritam Singh (Aljunied): Can I clarify with the Minister if there are any plans to review the attractiveness of the Lease Buyback Scheme in view of the relatively low take up to-date?

Mr Lawrence Wong: Mr Speaker, the Lease Buyback Scheme is an option that we make available to seniors. Inherently, the amount that you can unlock from the Lease Buyback Scheme, particularly for larger flats, may be smaller than the amount that you can get if you were to sell the flat in the resale market and right-size. That is understandable because if you sell the entire flat, you get larger proceeds; but with Lease Buyback Scheme, you are selling only part of the lease. There will be differences in the proceeds that a senior can get from right-sizing versus Lease Buyback. That is to be expected. The point is we are trying to make available more options so that seniors can decide, one way or the other, whatever their circumstances are. Some may prefer to right-size and move out, but some may actually prefer to say, "I want to live in my present flat and age-in-place".

Therefore, if that is your preference, we allow you an option, which is the Lease Buyback Scheme, and we are now expanding that option so that it is universal; so that it is not just confined to those staying in 4-room or smaller flats, but anyone in an HDB flat can have access to it. I think that is the basis for our thinking around these schemes, and we will, as I have mentioned earlier, continue to review them and make sure that Singaporeans in HDB flats will have a range of options to unlock the value of their flats for retirement.