Lease Buyback Scheme

The Lease Buyback Scheme (LBS) was introduced in 2009 by the Housing and Development Board (HDB). It enables elderly Singaporeans to monetise their flats and supplement their retirement incomes, without having to move out of their current homes. Under the scheme, eligible flat owners can sell part of their remaining lease back to the HDB, while retaining the right to live in their flat. Proceeds from the sale are then channelled to the owner’s Central Provident Fund (CPF) Retirement Account, which provides a constant stream of income during their retirement. In addition, a subsidy known as the LBS bonus is also provided.¹

Launch of the scheme
The Lease Buyback Scheme was first announced by Prime Minister Lee Hsien Loong during his National Day Rally speech on 19 August 2007 and was launched on 1 March 2009.² Under the scheme, homeowners could sell the tail-end of their flat leases to the HDB, leaving them with a reduced lease of 30 years in return for cash and regular payouts.

Initially, only elderly owners of three-room or smaller flats were eligible for the scheme, as its purpose was to support low-income elderly households who had fewer options to generate income through avenues such as downgrading to a smaller flat or renting out their whole apartment.³

The homeowners also had to meet other criteria such as age, income, outstanding mortgage amount, and history of home ownership and housing subsidies.⁴ Qualified applicants were also given a bonus of S$10,000, of which half was disbursed in cash. The remainder, together with the proceeds from the lease sale (based on market value), was then channeled to a national annuity plan known as CPF Life, which provided a monthly income for life.⁵

It was estimated in 2007 that 25,000 households or 70 percent of 2 and 3-room flat owners were eligible for the scheme.⁶ To educate the public on the initiative, HDB organised door-to-door visits and roadshows in 11 HDB towns that had high elderly populations.⁷ By June 2009, over 300 Singaporeans had signed up for the scheme, and the first payouts were disbursed.⁸

Responses to the scheme
The programme drew mixed responses from members of the public and industry experts. While some welcomed the option to monetise their flats while continuing to live there, others were less keen as they wanted to leave their flats to their children or were worried about outliving the 30-year lease. Others preferred to have the flexibility to sell their flats in the future to pay for large expenses or to rent out their whole flat to earn higher incomes. There were those who felt that the payouts were inadequate to keep up with the rising cost of living or were holding out for the value of their flats to appreciate. Some found the eligibility criteria was too restrictive or the scheme too difficult for the elderly to understand.⁹

According to an HDB sample survey of households in 2008, 84 percent of elderly respondents stated that they had no need for additional income from their flat as they received adequate support from their children as well as their personal and CPF savings.¹⁰ Three years after the launch, the take-up rate remained low at less than 2 per cent of eligible households.¹¹

Tweaks to the scheme
In 2010, the scheme was opened to elderly who had previously owned 4-room or bigger flats. Previously, these households were not eligible as they were deemed to have received substantial proceeds from the sale of their former flats. The restriction on outstanding mortgages was also lifted provided there was a minimum of S$60,000 from the sale proceeds that could be channeled to CPF Life. With these revisions, an additional 3,800 elderly households became eligible to apply for the scheme.¹²

Enhanced Lease Buyback Scheme
To make the scheme more appealing, the government introduced a slew of enhancements in December 2012. From 1 February 2013, beneficiaries could keep up to S$100,000 of their sale proceeds in cash if the top-up requirements of their CPF Retirement Accounts were met. Previously, all proceeds from the lease sale and half of the LSB bonus had to be deposited into their CPF Retirement Accounts. Beneficiaries would also receive an LBS bonus of S$20,000 fully in cash, double the previous amount of S$10,000 that was disbursed equally in cash and CPF funds. The eligibility criteria were also eased to allow former private property owners and those who had previously enjoyed more than one housing subsidy to join the scheme.¹³ The same year, the mortgage requirement was also relaxed to allow owners with outstanding mortgages of more than S$5,000 to participate in the scheme, so long as proceeds from the lease sale were sufficient to fully discharge the loan.¹⁴

More flexibility introduced
In response to feedback gathered during “Our Singapore Conversation on Housing”, the Ministry of National Development announced four major changes in September 2014 that would add flexibility to the scheme to accommodate the different needs and preferences of elderly Singaporeans, and to widen the pool of eligible applicants: 

1. The scheme was extended to 4-room flats, with the LBS bonus set at S$10,000. In 2019, the scheme finally included elderly owners of 5-room and larger flats.¹⁵
2. Seniors could choose the length of lease to retain, as long as it covered the youngest owners until they were 95 years old. Lease lengths ranging from 15 to 35 years (in 5-year increments) were offered, in addition to the previous fixed lease of 30 years.
3. The household income ceiling was raised from S$3,000 to S$10,000 per month. This ceiling was further raised to S$12,000 on 24 August 2015 and then to S$14,000 on 11 September 2019.
4. The CPF top-up requirement for households with two or more owners was also lowered, allowing joint owners to top up to half the minimum sum (later known as the Basic Retirement Sum) and withdraw up to a maximum of S$100,000 in cash from the remaining proceeds. The age eligibility criteria were also revised in tandem with changes to the draw-down age for CPF Life.¹⁶

In April 2020, the LSB bonus was increased for all flat types.¹⁷ As of December 2022, around 9,700 households had signed up for the LBS since its introduction in 2009. Out of these households, 55 percent lived in 3-room or smaller flats, 31 percent in 4-room flats, and the remainder in 5-room or larger flats.¹⁸ 



Author
Gracie Lee



References
1. Housing and Development Board, “New Monetisation Option for Elderly with Lease Buyback Scheme (LSB),” press release, 6 February 2009 (From National Archives of Singapore website); Housing and Development Board, “Lease Buyback Scheme.” Accessed 8 September 2023. https://www.hdb.gov.sg/residential/living-in-an-hdb-flat/for-our-seniors/monetising-your-flat-for-retirement/lease-buyback-scheme.
2. Ministry of Information, Communications and the Arts, “Transcript of Prime Minister Lee Hsien Loong’s National Day Rally English Speech on 19 August 2007 at NUS University Cultural Centre,” press release, 19 August 2007. (From National Archives of Singapore website); Tan Hui Yee, “25,000 May Gain under HDB Lease Buyback Scheme,” Straits Times, 1 September 2007, 1 (From NewspaperSG); Sheralyn Tay, “HDB Buy-Back: 25,000 Eligible,” Today, 1 September 2007, 11 (From NewspaperSG); Arthur Sim, “Lease Buyback Scheme: Govt to Give Extra Cash Subsidy to Home Owners,” Business Times, 1 September 2007, 9 (From NewspaperSG); Jessica Cheam, “HDB Unveils ‘Income for Life’ Scheme for the Elderly,” Straits Times, 29 February 2008, 4 (From NewspaperSG); Tan Huileng, “’Unlocking Value: Lease Buyback Scheme to Benefit the Elderly,” Today, 29 February 2008, 6 (From NewspaperSG); “HDB to accept applications for Lease Buyback Scheme from Mar 1,” Channel NewsAsia, 6 February 2009 (From Factiva via NLB’s eResources website); “Details Of Lease Buyback Scheme Released,” New Paper, 8 February 2009, 14 (From NewspaperSG); Gabriel Chen, “HDB’s Lease Buyback Scheme Launched,” Straits Times, 2 March 2009, 1. (From NewspaperSG).
3. Housing and Development Board, “New Monetisation Option for Elderly with Lease Buyback Scheme (LSB).”
4. Housing and Development Board, “New Monetisation Option for Elderly with Lease Buyback Scheme (LSB).”
5. “HDB’s new Lease Buyback Scheme to benefit 25,000 elderly households,” Channel NewsAsia, 28 February 2008 (From Factiva via NLB’s eResources website); “HDB Lease Buyback Scheme could be implemented in January 2009,” Channel NewsAsia, 26 August 2008 (From Factiva via NLB’s eResources website); Jessica Cheam, “Lease Buyback: A Mindset Issue,” Straits Times, 16 February 2009, A2 ; “Details Of Lease Buyback Scheme Released”.
6. Tan Hui Yee, “25,000 May Gain under HDB Lease Buyback Scheme,” Straits Times, 1 September 2007, 1 (From NewspaperSG); Parliament of Singapore, HDB Lease Buyback Scheme, vol. 84 of Parliamentary Debates: Official Reports, 26 August 2008, col. 3158, https://sprs.parl.gov.sg/search/#/topic?reportid=006_20080826_S0005_T0003.
7. Teo Xuanwei, “I Can’t Take The Flat with Me When I Die,” Today, 2 March 2009, 1, 3 (From NewspaperSG); Tan Dawn Wei, “HDB Lease Buyback Scheme Draws Interest,” Sunday Times, 29 March 2009, 8 (From NewspaperSG); Chen, “HDB’s Lease Buyback Scheme Launched.”
8. Joanna Seow, “First Payouts from HDB Lease Buybacks,” Straits Times, 24 June 2009, B1. (From NewspaperSG).
9. Desmond Ng, “Steady income,” New Paper, 29 February 2008, 14. (From NewpaperSG); Esther Fung, “The Best Option for Elderly Flat Owners,” Today, 25 October 2008, 30 (From NewspaperSG); Loh Chee Kong, “Keep Your Options Open,” Today, 20 April 2009, 8 (From NewspaperSG); Hedy Khoo, “Cash Payout Good, but Owners Still Wary,” New Paper, 21 April 2009, 9 (From NewspaperSG); Lorna Tan, “What If You Can’t Afford to Retire?,” Sunday Times, 25 April 2010, 37 (From NewspaperSG); Rachel Chan, “HDB Lease Buyback Scheme Sees Low Take-up,” MyPaper, 20 May 2010, A2. (From NewsLink via NLB’s eResources website); Cheam, “Lease Buyback: A Mindset Issue”; Jessica Cheam, “HDB Unveils ‘Income for Life’ Scheme for the Elderly, Chen, “HDB’s Lease Buyback Scheme Launched”; “HDB Lease Buyback Scheme Could Be Implemented in January 2009”.
10. Parliament of Singapore, Response to Lease Buyback Scheme, vol. 87 of Parliamentary Debates: Official Reports, 19 May 2010, col. 512, http://sprs.parl.gov.sg/search/#/topichtmlfilename=009_20100519_S0004_T0012.
11. Joanne Chan, “Low Take-up Rate for Lease Buyback Scheme,” Today, 28 February 2012, 4. (From NewspaperSG).
12. “Lease Buyback Scheme to be Enhanced starting April 1,” Channel NewsAsia, 5 March 2010 (From Factiva via NLB’s eResources); Esther Teo, “Lease Buyback Expanded,” Straits Times, 6 March 2010, A16. (From NewspaperSG)
13. Daryl Chin, “More Cash for Elderly Downsizing Flat or Selling Lease,” Straits Times, 28 December 2012, 1 (From NewspaperSG); Jacqueline Woo, “More Cash for Elderly Downgraders,” MyPaper, 28 December 2012, A5 (From NewsLink via NLB’s eResources website); Linette Heng, “The Bonus and the Scheme,” New Paper, 28 December 2012, 6. (From NewspaperSG)
14. Parliament of Singapore, Appeals for Lease Buyback Scheme for Persons Who Have Not Yet Fully Paid Up Housing Loan, vol. 94 of Parliamentary Debates: Official Reports, 3 September 2019, col. 15, http://sprs.parl.gov.sg/search/#/sprs3topic?reportid=written-answer-na-5179.
15. Rachel Au-Yong, “Lease Buyback Scheme Open to All HDB Flats; Govt Looking into Letting Buyers Use More of CPF to Buy Shorter-lease Flats,” Straits Times, 20 August 2018. (From NewsLink via NLB’s eResources website)
16. Amanda Lee, “Lease Buyback Scheme Extended to 4-room Flats,” Today, 18 August 2014, 4 (From NewspaperSG); “More Flexibility for Lease Buyback Scheme,” Channel NewsAsia, 3 September 2014. (From Factiva via NLB’s eResources website); “Enhanced Lease Buyback Scheme to Benefit More Elderly, Offer Greater Flexibility,” Singapore Government News, 3 September 2014 (From Factiva via NLB’s eResources website); “New Lease Buyback Scheme Takes Effect from April 1,” Singapore Government News, 31 March 2015. (From Factiva via NLB’s eResources website); “HDB Lease Buyback Changes Kick In,” Straits Times, 1 April 2015, B2 (From NewspaperSG); Janice Heng “More Home Owners Opt for HDB Lease Buyback,” Straits Times, 13 June 2015, A2 (From NewspaperSG); “Joint Press Release by MND, HDB : Affordable Homes, Closer Families, Stronger Ties,” Singapore Government News, 24 August 2015 (From Factiva via NLB’s eResources website); “Higher income Ceilings, Enhanced Housing Grant for HDB Flat Buyers,” Channel NewsAsia, 10 September 2019. (From Factiva via NLB’s eResources website).
17. Parliament of Singapore, Take-up of Lease Buyback Scheme, vol. 95 of Parliamentary Debates: Official Reports, 7 November 2022, col. 12. http://sprs.parl.gov.sg/search/#/sprs3topic?reportid=oral-answer-2943
18. Ng Keng Gene, “9,700 Households Have Sold Part of Remaining Leases Back to HDB,” Straits Times, 13 February 2023, 1. (From NewsLink via NLB’s eResources website)



The information in this article is valid as of January 2024 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.