Lease buy-back by HDB for seniors.

[tom]

Is this really is a good option for our seniors?

Recently, this topic was debated in Parliament. In order to help the poor elderly, who has no work, no income, no dependents, HDB is stepping in to HELP. First announced in 2007 National Day Rally Speech, lauching will begin next month.

In this programme, HDB will buy back 30 years lease. The elderly 62 years old, living in a 3 room flat or smaller, will receive $500 monthly for as long as he lives. Finally, the flat will be return to HDB when the lease expires.

  Is this a good option ? The answer maybe is a NO ! What say you ?

In my suggestion, the best will still be to rent out the spare room/rooms and received a monthly contribution from the tenant. At the end of the day, the property will still be intact and can still be passed down to the senior's next of kin.

[tom]

From the day of the speech till today, nobody seems to be interested. Accordine to press reports, interviews conducted with eligible senior citizens showed resistance to the proposal. Some analysts claimed there is a psychological barrier working against it. "  Asian's mindset of owning a home / property "

So, for the scheme to be accepted, experts say a lot of work must be done at the grass-root level to explain the whole concept to the elders.    The authorities are also trying to target the elderly's children in the hope of changing the senior's mind set.

Lets do a very simple arithmatic if such a proposal of the " buy back scheme " really benefited the senior citizens.

Top up with a grant of $10,000
Buy back 30 years lease with $500 monthly for the elderly owner.
30 years X 12 X $500 = $ 180,000

Total cash received $180,000 + $10,000 = $190,000.

So from year 2009 to year 2039 ( 30years ) assuming the old man kick the bucket    there goes everything, nothing is left for the next of kin.

Has anyone work out the actual value of a 3 room flat  in 2039 ? A simple estimate could be a  100 to 150 % more, only time will tell. So is the buy-back scheme really benefitted the home owner ?

[tom]

As reported in Singapore 25,000 households are eligible. So far less than five households sign up for the scheme. To have a clearer picture of the whole story, this is what really happens.

A HDB resident age 62 owns a three room flat with another 70 years left on it's lease. Estimated re-sale value of his flat is $236,000.

HDB buys back 40 years of his lease worth $104,000. The Govt. tops up another $10,000 totally $114,000. The owner continues to stay in his flat for the next 30 years. ( Lease 70-40 = 30 years left )

Upon signing the resident gets $ 5000 cash upfront. The balance ( $114,000 - $ 5000 ) $109,000 will be used to buy an annuity from CPF. Thereafter he will be receiving $530 monthly from the CPF.

At the end of the day, HDB owns the flat.

Do it our own way and see what happens :-

Rent out a room for $500 . In certain locations, it may be worth $600 . For 10,20,30 for as long as the owner lives. When he dies, the flat can still be pass down to his younger generations.  better right ? Unless of course the owner is senile and follow what others suggested or doing.

If HDB pays me $5000 monthly for as long as I live, maybe, the proposal is worth considering. Reason ? In another 30 years time my property worth $236,000 today may be priceless. RIGHT ??

[tom]

400 old folks were at the Toa Payoh West Community Club to meet their team of MPS from Bishan-Toa Payoh GRC.

The old folks were brief on the advantages of the Lease buy-back scheme by the team. 

1. They said the scheme is useful because older Singaporeans may have stop working early or did not have an opportunity to save enough money in their CPF accounts.

2. Some used their money to buy their own homes. Some helped their children to buy homes and may not have a stable income for life.

3. The residents are comfortable to stay where they are. Do not wish to move or downgrade to a smaller flat.

4. Some wants privacy and do not want to sub-let rooms. 

5. So if old folks don't like other options, the Lease buy-back scheme is attractive. 

So HDB will run exhibitions at 6 other locations next month, includes old estates where old folks concentrates in Macpherson, Queenstown and Kaki Bukit.