Old HDBs Still Provide a Nest Egg for the Future

Singaporean couples concerned about the potential future value of their HDB flat are still in a good position, stressed Lawrence Wong, the National Development Minister, despite recent comments and debate – including one started by Mr Wong himself.

Old HDB Still Provide a Nest Egg for the Future
Old HDBs Still Provide a Nest Egg for the Future

In a detailed post on his Facebook page, the minister went on to say that despite the 99 year leasehold that all HDB properties automatically come with, they still retain their value and indeed remain an asset, in years to come. He tempered this slightly by admitting that this needed to be backed up with long term planning and prudent decision making, but that is only common sense when it comes to investing in the housing market of course. Mr Wong also pointed out that whether they are buying a new HDB flat, or a resale one, Singaporeans receive “significant subsidies.”


His comments, come on the back of a post he made in March of this year, around the high prices associated with many HDB flats that are put onto the resale market, a post that sparked a lively online debate. This latest post certainly doesn’t retract his earlier views, but simply puts over the situation from another perspective, one that should definitely ease some of the concerns of HDB property owners with one eye on their future.


In it, Mr Wong gives some specific examples of how the framework of benefits and subsidies would work in reality, citing for instance, the situation of a couple, both 30 years old, earning a total of $5000 a month and looking to purchase a resale flat near their parents in Woodlands. This couple would benefit from up to $75,000 in grants off the purchase price, meaning they would easily be able to buy a flat with a lease of around 90 years. Taking up the fictional couple’s situation 35 years into the future, where – both now 65 with a remaining 55 years lease left on their flat, they are sat on a definite asset. An asset that should they wish, could be monetised to help them with their retirement. He backed this claim up stating that this exact situation was happening in Woodlands even as he wrote.


The elderly couple could do one of two things. If they wished they could down-size – or right-size – to a smaller, two-room Flexi-flat nearby, one with a 30 years lease remaining for example.  They would then receive $20,000 cash in the form of a Silver Housing Bonus. It is also likely that they would receive a sizable amount from selling their original property – approximately $100,000 in cash, along with $500 a month. This is alongside of course any income they receive through their CPF Life Fund.


Mr Wong, also put forward an alternative scenario for the same couple, suggesting that instead of moving, they could choose to remain in their home for say, a further 30 years, and then under the Lease Buyback Scheme (LBS), they could sell the 25 years left of the lease back to the HDB. This would provide the couple with a total of $57,000 in cash and a further $400 a month for their retirement. Once again, this is over and above anything they receive from CPF Life. The couple could also rent out the spare room to generate more income should that become necessary.


The example, Mr Wong wrote, is typical of the situation that many couples are currently going through, and will go through in years to come, and shows that a HDB leasehold flat “is not only a good home, but also a nest-egg for future retirement needs.”






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