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HDB extends LBS to 5-room and larger units as resale value of old flats continues to slide

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It was reported in the media on the first day of the year that the HDB’s Lease Buyback Scheme (LBS) has now been extended to all HDB flats, including 5-room and larger units, starting from yesterday (1 Jan 2019).

Previously, LBS was only available to owners of four-room or smaller HDB flats. Under LBS, flat owners can sell part of their lease back to HDB to get cash while continuing staying in it.

The extension of LBS to 5-room and larger units was announced by the Govt in Aug last year to help elderly unlock the value of their HDB flats to get cash, as more Singaporeans are finding it hard to retire while the cost of living spirals up.

Unlike other first world countries, the PAP government of Singapore does not believe in implementing pension schemes for Singaporeans. Many elderly Singaporeans in their 60s and 70s with an aging and aching body can be seen working throughout Singapore, sometimes startling even foreign visitors to Singapore.

Nee Soon GRC MP Henry Kwek said of the LBS extension, “The changes will help our seniors fund their retirement by tapping their housing equity, while retiring in the comfort of their own neighbourhood. I expect it to be well-received.”

Pay back to CPF first

To be eligible for LBS, HDB owners must at least be 65 years of age and must not have a gross monthly household income of more than $12,000. The flat must have at least 20 years to sell and owners must keep a minimum of 15 to 30 years of lease to stay, depending on their age.

However, after selling part of their leases, owners must first use the net proceeds to top up their CPF Retirement Account (RA).

  • For households with 1 owner, he or she will have to use the proceeds to top up the RA to the current age-adjusted Full Retirement Sum (FRS).
  • For households with 2 or more owners, each owner will have to use his/her share of the proceeds to top up his/her RA to the current age-adjusted Basic Retirement Sum (BRS).

And after the owners have topped up the RA to the specified requirements above, they are only allowed to retain the cash proceeds of up to a maximum of $100,000 per household.

If there is any remaining proceeds (after the top-up and setting aside of $100,000 cash), owners will have to use their share of the remaining proceeds to further top up their respective RAs to the current FRS, before they can retain any balance in cash as well. In other words, owners must use the cash proceeds to top up their CPF to FRS as much as possible before they can retain any cash balance.

On HDB website, it gave an example of a couple, both 65 years old, who are joint owners of a fully paid 4-room flat worth $450,000 in the market, with 65-year remaining lease. They choose to keep a 30-year lease, and sell the tail-end 35-year lease to HDB for $190,000 (note that the price of a property is not directly proportional to the length of its lease as HDB chooses to “front-load” its lease in the initial years to take into account the “time-value of money”).

The current Age-Adjusted Basic Retirement Sum (BRS) for the couple in the example is $88,000 each. It also assumed that the RA balances of the husband and wife were $20,000 and 5,000 respectively.

So, the bottomline in the given example is that the couple would get cash proceeds of $49,000 ($39,000 for the balance of cash proceeds and $10,000 for the one-time LBS Bonus) after signing up LBS with HDB. They would also get a monthly payout from CPF Life of $860 or $430 each.

At $430 per month per person, it would be deemed by the government to be sufficient since PM Lee said during the National Day Rally last year that hawker centres would be providing economical meal options priced at $3 or less. Hence, at 3 meals a day, each person would only need $270 a month to survive.

Nevertheless, do note that the above example calculation is based on the premise that the 4-room flat is worth $450,000 in the market.

Market value of older HDB flats sliding down

In the media report, it quoted part-time security guard Tang Lum Sui, 68, a widower who lives alone in his Jalan Bahagia 5-room flat is all for the extended LBS.

“I don’t want to move out of Toa Payoh because I have lived here all my life, and I like that my son’s family (living in Qatar) can stay with me whenever they come back to Singapore,” he said. Mr Tang, whose flat has 67 years left on the lease, added, “As long as the terms are favourable, I will go for it.”

However, Mr Tang should be aware that the value of his 5-room flat is no longer as high as before.

For example, according to PropertyGuru, housing agents have been trying to sell 5-room units in block 30 at Jalan Bahagia for close to $600K:

But the value of the units transacted at this block has been observed to be sliding down rapidly in the last few years.

Data on PropertyGuru shows that units at the block were indeed transacting at $500 to $600K from 2014 to mid-2016. But the last 2 transactions which occurred in Mar 2018, however, shows that one was sold at $403,000 while the other at $322,888.

Resale value of older flats has been sliding down ever since National Development Minister Lawrence Wong let the cat out of the bag in Mar 2017 by disclosing that not all old HDB flats are eligible for SER. He added that for most HDB flats, their leases will eventually run out and the flats returned to HDB, which in turn surrenders the land the flats are on back to the State. In other words, the value of the flats will go to zero when their lease ends.

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Current Affairs

Ng Eng Hen: Dust clouds likely caused armoured vehicle collision during Exercise Wallaby

Dust clouds limiting visibility likely contributed to the collision between two Hunter vehicles during Exercise Wallaby, Defence Minister Ng Eng Hen explained in his parliamentary reply. 12 servicemen sustained mild injuries, but safety measures prevented more serious outcomes. A formal investigation is ongoing to ensure further safety improvements.

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SINGAPORE: Low visibility caused by dust clouds was identified as the likely cause of the collision between two Hunter armoured fighting vehicles (AFVs) during Exercise Wallaby last month, Defence Minister Ng Eng Hen said in a written parliamentary response on Tuesday (15 October).

The incident, which occurred in Queensland, Australia, on 24 September 2024, resulted in mild injuries to 12 servicemen.

Dr Ng’s statement was in response to a parliamentary question from Mr Dennis Tan, Workers’ Party Member of Parliament for Hougang SMC.

Mr Tan asked for details on the accident, specifically its cause and whether any lessons could be applied to enhance training and operational safety within the Singapore Armed Forces (SAF).

The collision took place during a night-time movement of Hunter AFVs at the Shoalwater Bay Training Area.

The vehicles were returning to base when one rear-ended another. Dr Ng explained that the dust clouds generated by the AFVs’ movement significantly impaired visibility, might likely contributing to the accident.

The 12 affected servicemen sustained mild injuries and were promptly taken to the nearest medical facility.

None of the injuries required hospitalisation, and all 12 servicemen were able to rejoin their units for training the next day.

According to the minister, adherence to safety protocols—such as wearing seat belts and protective gear—played a crucial role in limiting the injuries to mild ones.

Following the incident, a safety pause was immediately implemented, with all drivers being reminded to maintain proper safety distances, especially when visibility was compromised.

Troops were also reminded to adhere strictly to safety protocols, including the proper use of safety equipment, Dr Ng added.

The safety lessons from the incident were shared not only with the affected units but also with other participating groups in the exercise, as well as units back in Singapore, through dedicated safety briefings.

Mr Tan also asked about the broader implications of the incident. In his response, Dr Ng said that a formal investigation had been launched in accordance with SAF’s safety incident protocol.

The investigation aims to assess the circumstances more thoroughly and identify any further measures that could be taken to enhance safety.

Dr Ng shared that recommendations arising from the investigation will be implemented where necessary.

Exercise Wallaby is SAF’s largest unilateral overseas exercise, and the 2024 edition began on 8 September, running until 3 November.

The exercise involves approximately 6,200 personnel, including 500 operationally ready national servicemen.

The exercise has been conducted at Shoalwater Bay Training Area in Queensland since 1990, and it is a key part of SAF’s overseas training program.

The Hunter AFV, one of the vehicles involved in the collision, is a state-of-the-art platform jointly developed by the Defence Science and Technology Agency, the Singapore Army, and ST Engineering.

It replaced the SAF’s aging fleet of Ultra M113 AFVs in 2019, which had been in service since the 1970s. The Hunter is equipped with advanced features, including a 30mm cannon, a 76mm smoke grenade launcher, and an automatic target detection and

tracking system designed to enhance operational effectiveness. It is also capable of traveling at increased speeds and covering longer distances, making it a versatile asset for the SAF.

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Current Affairs

Government to “carefully consider” Lee Hsien Yang’s demolition application for 38 Oxley Road

The Singapore Government will “carefully consider” Mr Lee Hsien Yang (LHY)’s application to demolish the house at 38 Oxley Road. LHY announced his intent on Tuesday morning following the recent death of his sister, Dr Lee Wei Ling, reaffirming his commitment to honour his parents’ wish for the house’s demolition.

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The Singapore Government has indicated that it will “carefully consider” Mr Lee Hsien Yang’s (LHY) application to demolish the family home at 38 Oxley Road.

LHY, the youngest son of Singapore’s founding Prime Minister, the late Lee Kuan Yew (LKY), announced his intention to apply for the demolition in a Facebook post on 15 October 2024, following the death of his sister, Dr Lee Wei Ling, on 9 October.

The announcement marks a significant development in the ongoing saga over the fate of the historically significant property, which has been at the heart of a family dispute since LKY’s passing in 2015.

In his will, executed in December 2013, LKY expressed his desire for the house to be demolished “immediately after” Dr Lee moved out of the property. Dr Lee, a prominent neurologist, had been the last remaining resident of the house.

LHY reaffirmed his commitment to carrying out his father’s wishes, stating, “After my sister’s passing, I am the only living executor of my father’s estate. It is my duty to carry out his wishes to the fullest extent of the law.”

He added that he would seek to build a small private dwelling on the site, which would be “held within the family in perpetuity”.

LHY also referenced his brother, Senior Minister Lee Hsien Loong’s (LHL) remarks in Parliament in 2015, when he was Prime Minister, stating that upon Dr Lee’s passing, the decision to demolish the house would rest with the “Government of the day.”

In response to media queries regarding LHY’s announcement, a spokesperson for the Ministry of National Development (MND) acknowledged the intended application and emphasised that the Government would “carefully consider issues related to the property in due course”.

The spokesperson also highlighted that any decision would need to balance LKY’s wishes, public interest, and the historical value of the house.

The house at 38 Oxley Road, where key decisions about Singapore’s path to independence were made, has been a focal point of public and political discussion.

The future of the house became contentious in 2017 when LHY and Dr Lee publicly accused their elder brother, LHL, of trying to preserve the house against their father’s wishes for political reasons.

LHL denied the accusations, issuing a Ministerial Statement in Parliament, where he also raised concerns over the preparation of their father’s final will. He clarified that he had recused himself from all decisions regarding the property and affirmed that any government action would be impartial.

In 2018, a “secret” ministerial committee, which was formed in 2016 to study the future of 38 Oxley Road, proposed three options: preserving the property and designating it as a national monument, partially demolishing the house while retaining the historically significant basement dining room, or allowing complete demolition for redevelopment. LHL accepted the committee’s conclusions but stated that no immediate decision was necessary, as Dr Lee was still living in the house.

In a statement conveyed by LHY on behalf of Dr Lee after her passing, she reiterated her strong support for her father’s wish to demolish the house. “My father, Lee Kuan Yew, and my mother, Kwa Geok Choo, had an unwavering and deeply felt wish for their house at 38 Oxley Road to be demolished upon the last parent’s death,” the statement read.

She added, “He had also appealed directly to the people of Singapore. Please honour my father by honouring his wish for his home to be demolished.”

Despite selling the house to LHY at market value in 2015, LHL’s stance regarding the house’s preservation became a public issue, especially after the family disclosed that the Government had raised concerns about reinstating the demolition clause in the 2013 will. The ministerial committee had reviewed the matter, but a final decision was deferred until now.

The fate of 38 Oxley Road remains to be seen, but the Government’s decision will likely have lasting implications for the legacy of the Lee family and the conservation of Singapore’s historical landmarks.

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