Lease Buyback Scheme (LBS) is a monetisation option introduced by Singapore to help elderly households in three-room or smaller flats unlock their housing equity to meet their retirement needs. It was announced by Singapore’s Minister for National Development, Mah Bow Tan, in Parliament on 6 Feb 2009, and the Housing and Development Board (HDB) has started accepting applications for LBS from 1 Mar 2009.[1]
The scheme involves HDB buying back the tail-end of the lease of the flats, each HDB flat has a 99-year lease from date of completion, leaving the elderly with a shorter 30-year lease. In addition to the value of the housing equity unlocked from the shorter lease, the Government will top up the amount with $10,000. Of the total value, $5,000, will be given upfront as a lump sum while the remainder will be used to purchase an Immediate Annuity from the Central Provident Fund (CPF) Board to provide a monthly stream of income for life.[1]
The payout under the Annuity is in addition to whatever source of income the elderly already have, e.g. CPF savings, investments, insurance, rent from subletting of rooms etc. The shorter 30-year lease term is non-transferable in the open market. If it needs to be terminated prematurely, the lessee or his beneficiaries will receive a pro-rated refund on the residual lease.
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LBS is designed to let elderly residents to age in place comfortably. They can continue to stay in their flats, in the same familiar environment and community that they have grown accustomed to. Besides, they will have a steady source of monthly income for the rest of their life. This is particularly helpful to low-income elderly households of smaller flats who are unable to take advantage of other monetisation options, e.g. downgrading to a smaller flat elsewhere, or renting out the flat.[2]
LBS is available to Singapore citizens owning three-room or smaller HDB flats. They must also meet the following criteria:
There are about 34,800 households who are eligible for the LBS in Singapore as of Apr 2010.[3]
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