Can you make money from your HDB flat while living in it? Is there a way to make an income from your property without renting it out?
The answer to both of those questions is: Yes, under the Lease Buyback Scheme (LBS).
What is the Lease Buyback Scheme?
The LBS allows you to sell part of your flat’s lease back to the Board and use the proceeds to receive a bonus that can be your stream of income during retirement.
Are you eligible for the LBS?
You must meet these requirements to qualify for the scheme:
| Criteria | Eligibility |
| Age | 65 years old or older |
| Citizenship | At least one owner must be a Singapore Citizen |
| Gross Monthly Household Income | $14,000 or less |
| Flat Type | All flat types, except for short-lease flats, HUDC and Executive Condominiums |
| Property Ownership | Must not be owning another property at the same time |
| Minimum Occupation Period | 5 years |
| Minimum Lease | At least 20 years |
Read Also: What You Need to Know About Minimum Occupation Period
So how does the LBS work?
Let’s say, you and your partner are both 66-year-old empty-nesters who own a fully-paid 5-room-flat, and it has a remaining lease of 65 years.
Under the Lease Buyback Scheme, you can choose to sell 35 years of your lease to HDB, keeping the remaining 30 years of the lease, and get a bonus! The LBS bonus depends on the type of flat you own, though.
Since you own a 5-room flat, the LBS bonus you will receive can be up to $7,500. 4-room flats, on the other hand, can receive up to $15,000 and $30,000 for 3-room flats.
In addition to the bonus, the proceeds will be used to top up your CPF Retirement Account (RA).
If there is only one flat owner, the RA top-up will be up to the current age-adjusted Full Retirement Sum (FRS). But for households with two owners, each owner will have to use his or her share of the proceeds to top up his or her RA to the current age-adjusted Basic Retirement Sum.
You can only pocket the cash left after you’ve topped up your CPF RA. You may retain up to a maximum of $100,000. But if there’s still some remaining proceeds after the top-up and setting aside of the $100,000 cash, you are required to use you and your co-owner’s share to futher top up your respective RAs to the current FRS before you can keep the remaining balance in cash.
How to determine your remaining lease period?
You can actually choose how long your remaining lease will be, according to the age of the youngest owner of the flat. The duration of the lease retained will determine the amount of net proceeds you can receive.
| Age of youngest HDB flat owner | Minimum lease retained | Other options |
| 65 – 69 | 30 | 35 |
| 70 – 74 | 25 | 30, 35 |
| 75 – 79 | 20 | 25, 30, 35 |
| 80 and above | 15 | 20, 25, 30, 35 |
Here’s how to determine the amount you need to top up to your CPF RA
This applies to applications received from 1 Jan 2022.
| Age of Flat Owner | Top-up Requirement for 1 Owner | Top-up Requirement for 2 or More owners |
| 65 – 69 | $192,000 | $96,000 |
| 70 – 79 | $182,000 | $91,000 |
| 80 and above | $172,000 | $86,000 |
How to calculate the amount of LBS bonus you can receive?
Your household will receive the full bonus as long as the total top-up to the flat owners’ RA is $60,000 or more. If you are unable to do so, you will receive a pro-rated bonus of:
- $1 for every $2 CPF top-up for 3-room or smaller flats; or
- $1 for every $4 CPF top-up for 4-room flats; or
- $1 for every $8 CPF top-up for 5-room flats or bigger flats.
So how can you actually earn money through the LBS?
Well, if you have at least $60,000 in your RA after the top-up, you can use those savings to buy a CPF LIFE plan, which will provide retirees with a monthly income for life. (Note: Those aged 80 years old and above are not eligible to join CPF LIFE.)
In summary, this is how the Lease Buyback Scheme works
| Step 1 | Sell part of your flat’s lease to HDB |
| Step 2 | Choose to retain the length of your remaining lease based on the age of the flat’s youngest owner |
| Step 3 | Receive a bonus of up to $30,000 for a 3-room or smaller flat, $15,000 for a 4-room flat and $7,500 for a 5-room or bigger flat |
| Step 4 | Use the net proceeds to top up your CPF RA |
| Step 5 | Use your RA savings to join CPF LIFE to receive monthly payouts no matter how long you live |
Why is LBS important?
Retirement funds – or the lack thereof – is a pressing issue in Singapore as more and more of the elderly population find themselves facing retirement without a financial safety net and/or insufficient funds in their CPF RA. The LBS was then introduced by HDB as a way to help seniors earn cash without parting ways with their beloved home. Homeowners who participate in the scheme can still rent out spare rooms for additional income.
Does Ohmyhome’s in-house property agent recommend it?
Our Ohmyhome CEA-licensed proeprty agent emphasised that the scheme will not necessarily benefit everyone’s circumstances. He explained that the LBS would not be an advantage for empty-nesters who are willing part with their home and right-size to a smaller unit.
However, it is definitely an avenue to consider should the discerning elders have chronic/mobility-restrictive conditions and/or formed a tightly-knit community amongst their neighbours that would prevent them from buying a new home.
He recommends that it is worth considering other possible options such as right-sizing to a smaller flat if you’re willing to relocate or renting out your property to tenants. After all, you won’t be able to put your flat on the market again after LBS.
If you need assistance with regards to the Lease Buyback Scheme, you can call HDB Branch Service Line at 1800-225-5432 between 8:00 am and 5:00 pm from Mondays to Fridays.
Planning to sell your old flat instead?
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