SINGAPORE (Today), October 31, 2007:As an HDB flat owner, there are five ways you can generate income from your flat for retirement needs
1. RENT OUT YOUR HDB FLAT/ROOM(S)
• You can rent out your entire subsidised/non-subsidised flat* after living in it for at least five years and three years respectively. You need to get approval from HDB to rent out the entire flat.
* Subsidised flats: Flats bought directly from HDB or from the open market with a CPF housing grant; and
* Non-subsidised flats: Flats bought from the open market without a CPF housing grant.
• Alternatively, you can rent out one or more rooms without approval from HDB if you own a 3-room or bigger flat. However, you must continue to stay in the flat.
• You can receive a monthly rental of about $200 to $500 for a room, and $450 to $1,400 for an entire flat.
• You will pay a higher property tax (10 per cent) if you rent out the entire flat. There will be no change to your property tax if you only rent out room(s).
2. MOVE TO AN HDB STUDIO APARTMENT
• You can sell your flat and buy a 30-year lease Studio Apartment (SA).
• If you are the main applicant for an SA, you must be a Singapore Citizen and at least 55 years old.
• You may buy the SA with other eligible applicants. If they are related to you, such as your spouse, parents, siblings or children, they must be Singapore Citizens or Singapore Permanent Residents (SPRs) and at least 21 years old. If they are not related to you, they must be Singapore Citizens and at least 35 years old.
• Applicants who are 55 years old andabove can use their CPF savings to pay for the SA after setting aside the CPF Minimum Sum cash component. After you sell your flat and buy an SA, you would expect to have some money left. You may consider buying a life annuity with this money so that you can receive a monthly income for life.
3. MOVE TO A SMALLER, CHEAPER HDB FLAT• You can sell your flat and buy a smaller, cheaper flat from the resale market or a smaller subsidised flat from HDB such as a 2- or 3-room flat. However, if you are a second-time buyer of a flat from HDB or have taken a CPF Housing Grant before, you need to pay the resale levy if you choose to buy another subsidised flat from HDB.
• You need to meet the prevailing eligibility conditions to buy a new flat from HDB or a resale flat.
4. REVERSE MORTGAGE
• A reverse mortgage loan on your flat is a way to allow you to continue staying in your flat and receive a monthly income at the same time.
• The youngest flat owner in the household must be at least 62 years old and the owner should have little or no outstanding HDB or bank housing loans and/or upgrading costs.
• The monthly cash amount you will receive depends on the age of the youngest borrower, loan period, prevailing interest rate and the property value of your HDB flat.
• You will need to repay the loan when you sell your flat or when the loan term expires.
• NTUC Income currently offers this scheme. You should obtain information, understand how it works and consider carefully the cost and risk involved, before deciding to reverse mortgage your flat.
5. LEASE BUYBACK SCHEME
The Lease Buyback Scheme (LBS) is a new monetisation option where HDB will buy back the tailend of the lease of a 2-room or 3-room flat from elderly lessees (aged 62 and above) who have enjoyed only one housing subsidy or none at all. This will leave them with a shorter lease of 30 years on the same flat. They will be able to stay on in the same flat to enjoy the familiarity of their home and community.
The owners will receive the payout in three parts:
• A lump sum upfront upon joining the scheme;
• Monthly payments for 30 years as a steady stream of income; and
• Longevity insurance that will pay out a monthly allowance for as long as they live.
The amount “unlocked” by the buyback will depend on each flat’s market value. In addition to the payout from the flat, the lessee will also receive a subsidy from the Government.
Details of the scheme are being worked out and an announcement will be made in due course.
Source: www.hdb.gov.sg
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