Yes and no. Depending very much on the remaining lease and the notional NPV of any rental receipts. Assuming the very first old flat was built 1970, the lease will not end till sometime in 2069 which is a good 60 years away, assuming they will not do some magical rent-seeking trick by demolishing your “old-unsightly” block and upgrade you to a better-value “modern” unit which you have to top up any shortfall in the purchase price of your new unit with further $$$$.

*of course, I am assuming that those built sometime in 1970 also have a lease period of 99 years. Anyone cares to correct.

FEB 29 ???? You mean March 1st

What a ripped off !!!!!!! Those who have sign up kenna conned…

Better sell the flat, take the cash and rent…. Prices for HDB will drop like a stone.

CPF Life, I believe, is an annuity payable for life, as long as you live. And ($5,000 cash + $92,000 to CPF Life) represents the present value of the offer in exchange for lease in excess of 30 years.

Annualised 5% hdb price appreciation over 30 years, across the board, is a speculative assumption on capital gain. Prices deflated, struggled and yet to recover over the last 11 years, and the favourable conditions of the late-80s to mid-90s to escalate prices are no longer available. Looking at opportunity costs would be a definitive approach.

With 5% financing interest rates and 70 years lease balance, anyone who wants to buy his current market value $200,000 flat would have to pay him cash flow equivalents of $10,340 p.a. over 70 years. Meaning, if the owner decides to stay in the flat for next 70 years, his opportunity costs would therefore be $10,340 every year. (Ignoring the opportunity cost of renting out, which could be higher.)

The scheme would buy over his rights to stay in the flat from 31st – 70th year for $97,000 but his opportunity costs remains the same at $10,340 yearly during the period. This opportunity costs would be $41,052 at present value.

NPV is therefore ($97,000 – $41,052).

On the other hand, net opportunity costs ($41,052 less $5,000 cash) with 5% interest rates (to make it simple) and CPF Life annuity of $500 per month, it takes 7.3 years to even off.

So if the owner can live 8 years and more, then he shall benefit from the scheme. (Note also that the family gets pro-rate refund from hdb for the unused lease, if the owner dies before 30 years.)

Thank you.

i agree that the dwellers can fetch 200k in the open market. But that will mean they have to either shift into an old folks home or bunk in with their children to fully benefit from the sale.

I think the liability is only the initial S$5k cash. The rest of the money goes into CPF which GIC/Temasek can use for investments…and its not like the govt can’t print more money if there wasnt enough…as irresponsible as it may seem :-’

The reverse mortgage does look on the low side. Going from the rental point of view, the govt is paying S$241 per month which is in fact low. To build on that, i think rental-by-offspring is what the govt wants to cash in on… perhaps due in part to loss of revenue by the no death-tax law. I noticed the hdb article mentioned “..relocate the flat owner to rental housing”. Perhaps this is a clue as to what hdb intends to do with the flat after the 30 years is up. An early move to control rental prices in the 2nd/3rd generation?

My two cents :) Shh…..i small hum.

This article should be highlighted during the next election.

Has this been in the mainstream newspaper, people may have thinking that government is doing that for good of citizen. They never think that they are sucked for life because they lack the financial skill to see through the scam.

2. It is clear that the HDB flat, in which 86% of Singaporeans live and who take pride in owning their own home, IS A BLACK HOLE MONEY TRAP FOR US AND AN UNENDING GUSHING WELL OF BLACK GOLD FOR THE LIEgime.

3. First, the LIEgime screws us by pricing the typical ~S$30,000 HDB flat [cost of construction, land, facilities, etc] at >S$300,000! Then says we are enjoying a “market subsidy” on each flat!!!

4. Now, the LIEgime comes up with yet another scam to screw us yet again ON THE SAME FLAT to the tune of another ~S$0.5 MILLION!!!!!!!!!! [There are other scams like the SERS EnBloc Scam I have written about in my blog].

5. It is always nice to own the home you live in but this very human weakness is being mercilessly exploited again and again ON THE SAME FLAT in all kinds of scams, all designed to screw us for $hundreds of thousands, even more contemptibly this time because the victims are those least able to understand the scam and who have no other choice, that is, those who have to resort to this arrangement due to being centsless.

6. It is, like always, on these poor suckers’ sufferings that the LIEgime extorts its greatest billions so “it will have more ‘weight’ internationally” like being able for LIE KY LHL to suck up to the Americans by bailing them out, losing our billions in the process. Disgusting.

7. This is the inevitable result of an UNelected govt that holds on to power by stealing elections and stuffing fake PAP ballots. The Malaysian election proves we, too, want change and a more accountable and responsive govt. We are denied that by massive electoral cheating. Dr CHEE is right. We will have to take to the streets to wrest the country back from the Kleptocracy.