Housing flats at Tiong Bahru estate. Photo: The Straits Times
It is unlikely that the Lease Buyback Scheme (LBS) will be extended to five-room flats, as that would not be an "efficient use of space".
But elderly home owners will be getting more help to downsize their flats in time to come, said Minister for National Development Lawrence Wong last week. He was addressing the need to help seniors monetise their homes for retirement.
Introduced in 2009, the LBS allows elderly home owners to sell part of their flat lease back to the Housing Board for retirement income. Previously, the scheme applied only to three-room and smaller flats, but it was expanded in April last year to include four-room units.
Asked if his ministry would consider extending the programme to five-room flats, Mr Wong said there was no such urgency.
"I'm reluctant to do so… it's still not an efficient use of space," he said, pointing out that an elderly couple may not require an entire five-room flat.
He added: "We have extended it to four-room (flats) for now – I think let's keep it there for a while and we will study other options for right-sizing first."
Currently, elderly home owners who wish to monetise their flats can do so through schemes such as the LBS and the Silver Housing Bonus.
The latter gives seniors a cash grant if they downsize their flat and top up their Central Provident Fund retirement account with the sale proceeds. More can be done to smoothen such transitions, said Mr Wong.
"It sounds straightforward to do but there are a lot of transactions that you have to go through," he noted, adding that some people may have problems with financing and timing their moves.
"You have to make sure that the timing works well, (that) everything is back to back, otherwise, you would end up caught in between," he said.
"All of these are frictions that may get in the way of the decision to right-size," he added. "We are seeing what more we can do to help this particular group of home owners, especially when it comes to right-sizing (their flat)."
Mr Wong did not specify when and how this will be done, but added that it is a work in progress that will be delivered within his term.
R'ST Research director Ong Kah Seng said the decision to keep the LBS to smaller flats makes sense, as many elderly folk are still more conservative and do not want to sell part of their lease.
"Many prefer to bequeath their flat to the next generation instead," he said.
As of May, more than 1,500 households have taken up the scheme, with 541 doing so between April last year and March this year.
On the issue of helping seniors unlock the value of their flat, Mr Ong suggested that the Government could provide more comprehensive, individualised counselling on monetisation options.
"Many of the elderly take reference from their friends and siblings, but their circumstances might be different. What the Government can do is advise them on the pros and cons of each option," he said.
"Or maybe it can work with property agencies and have some agents who specialise in such transactions for elderly home owners."
Written by Yeo Sam Jo for The Straits Times