CPF Lease Buyback Scheme

Lease Buyback Scheme (LBS)

Lease Buyback Scheme is one of the schemes offered by the Singapore Government to aid its elderly to cope with their retirement. It aims to provide the elderly with a monthly income stream while allowing then to continue living in their current flat.

Basic Idea/Concept

  1. You sell part of your flat’s available years to the Government.
  2. The Government will pay you a lump sum for the years you sold to them.
  3. You continue staying at your current flat until you reach reached the end of your flat’s years.

Read also: Things you MUST know about using CPF for Housing Loan

Note: You never own your HDB flat, you merely leased it from the Government for 99 years (new flats). In LBS, it is like you initially paid 4 years’ worth of rent to the landlord but subsequently felt that you only needed to stay in the flat for 2 years, so you went to the landlord and ask for a lease reduction and a refund of your rent.

In LBS, you are selling part of that 99 year lease back to the HDB for money. The money will be paid to you in a lump sum. However, it will first be used to top-up your CPF Retirement Account to the Full Retirement Sum* or Basic Retirement Sum** before you can get any cash out of it.

*Full Retirement Sum if you are the single owner of the flat
**Basic Retirement Sum if there are 2 owners to the flat

You are a single HDB flat owner and have stayed in your HDB flat for 30 years. There are still 69 lease years remaining for your flat. You decided to keep 40 lease years for yourself and sell the rest (29 years) back to HDB. In this case, the HDB will pay you a lump sum based on the value of the 29 years you sold.

You continue to stay in your flat for the next 40 years. The lump sum will be used to top up your CPF to the Full Retirement Sum (FRS) and any proceeds in excess will be paid to you in cash (except if it is more than $100,000 which then the extra amount will be kept in your CPF). The FRS will then be used to buy a CPF LIFE Plan that will provide you with a monthly income stream until the day you pass away.

Also read: CPF Cash Top-up Relief

Pass Away Before My Lease Ends
Your dependent(s) (wife or children) get to live for the remaining period of the lease.
Your dependents can also choose to return the flat to HDB. In this case, the HDB will pay you a lump sum based on the value of the remaining lease years. The unused portion of your CPF LIFE however, will be treated with based on CPF’s regulations.

Outliving My Lease Period
There are no examples yet for such cases. However, HDB has said that they will look into the circumstances you are in and help you find the appropriate housing arrangement.

Reasons elderly might wish to take this up:

  1. Wish to continue staying in their current flat
  2. Downsize option not feasible – particularly if you are already living in a small size flat
  3. Renting out of rooms not feasible – particularly if you are already living in a small size flat
  4. No dependents thus there is no need to keep the flat for the next generation
  5. Dependents have their own flats, in which case the elderly can use their flat to fund their retirement instead of depending on their children
  6. Wish to have a larger monthly payout from their CPF LIFE plan. This is done by putting the lump sum they will get from their LBS into their CPF.
  7. Wish to have the lump sum proceeds. This is slightly more complicated.
    Single homeowner – Top up your RA to the FRS, you can withdraw the rest in lump sum
    Several homeowners – Must top up all your RA to the BRS and the total amount top up to all accounts must be at least $60,000. If FRS has been met by ALL owners, they may withdraw the rest of the proceeds in a lump sum.