AN EVALUATION OF THE HDB LEASE BUYBACK SCHEME : CAN IT HELP UNLOCK CASH FOR ELDERLY PUBLIC HOMEOWNERS

Abstract

In Singapore, the unique way of financing housing through the mandatory savings system has created a class of “asset-rich cash-poor” Singaporeans. This paper provides a framework to examine whether the newly implemented Lease Buyback Scheme (LBS) housing policy in Singapore can be harnessed as a source of financing retirement income for elderly homeowners. This paper also assesses the viability of the LBS based on residents’ perception, receptivity and expectation. Our simulation results indicate that the LBS policy is currently not popular with many elderly homeowners. Only a small percentage of the respondents generally welcome the concept and is happy that the LBS scheme was implement by the Government as a form of housing financial tools in converting assets into cash. However, the limitation of eligible target group reached out by the LBS aspects remained a major concern for most respondents. With regards to the survey finding, some recommendations were suggested to improve or address the concerns arising out from the LBS scheme. These recommendations suggest that the Government considers more incentives by working with insurers to offer higher payout. Secondly, the government should consider opening up the schemes to elderly living in bigger flats and consider giving out to those ‘low and lower middle’ income households bigger grant. Finally, the government may consider topping additional of 5 to 10 years with rent free upon the expiring of the 30 years lease for those elderly homeowners who outlive their terms.