Seniors receive average LBS proceeds of $177,000

The Ministry of National Development noted that most seniors – after taking up the Lease Buyback Scheme – have enough CPF RA savings “to benefit from a lifelong income stream of about $1,000 per month on a household basis under CPF LIFE”.

With the Lease Buyback Scheme (LBS) enhanced in April 2015 to cover four-room flats, seniors who took up the scheme received average proceeds of $177,000 per household, including the LBS cash bonus, revealed the Ministry of National Development in Parliament on Monday (7 October).

In its written reply to MP Foo Mee Har, who asked about the average amounts of funds received by seniors when they monetised their HDB flats via the LBS, the ministry said the proportion of proceeds received by seniors in their CPF Retirement Account (RA) and cash depended on their CPF RA balances before they availed of the LBS.

In general, seniors with higher CPF RA balances would receive a higher proportion of their proceeds in cash, it said.

MND noted that most seniors – after taking up the LBS – have enough CPF RA savings “to benefit from a lifelong income stream of about $1,000 per month on a household basis under CPF LIFE”.

Aside from that, most seniors also get some of their LBS proceeds in cash, on top of the cash bonus.

Separately, the ministry shared that the mean and median mortgage service ratios (MSRs) of HDB housing loans disbursed at key collection between 2014 and 2018 have been similar, with the ratios stable at about 20 percent of new flat purchases and 25 percent for resale flat purchases.

“As flat buyers are required to dispose of any existing property after they collect the keys to their flat, they will be servicing an HDB housing loan for a single flat.”

The MSR cap of 30 percent of flat buyers’ income is one of the criteria used to determine the maximum amount of loan that flat buyers can avail.

Some flat buyers, however, want to shorten their loan tenure in order to minimise interest costs.

“For a small number of such flat buyers (around three percent of those who collected keys to their HDB flats in 2018), while their approved loan amount adheres to the MSR cap over the maximum applicable loan tenure, their mortgage instalment over the shortened loan tenure may exceed 30 percent of their monthly income.”

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg