Monetising Your HDB Flat for Retirement in Singapore: 4 Ways to Unlock Your Property's Value

PropertyGuru Editorial Team
Monetising Your HDB Flat for Retirement in Singapore: 4 Ways to Unlock Your Property's Value
Monetising your HDB flat when you retire is a way you can deal with empty nest syndrome and get more cash in your golden years. I mean, who doesn’t want to retire comfortably?
Apart from your savings, CPF, investments and support from children, your HDB flat is one way to earn a source of sustained retirement income. In this article, we’ll talk about the various schemes, such as the Lease Buyback Scheme (LBS) and the Silver Housing Bonus (SHB), and ways you can unlock the value of your HDB flat.

Method 1: Sell Your Remaining HDB Lease under the Lease Buyback Scheme

The Lease Buyback Scheme has gained popularity in recent years as a way of monetising your HDB flat for retirement.
Its premise is simple: you sell part of the remaining flat’s lease back to HDB. In return, you can continue living in your flat, with the money disbursed via monthly CPF LIFE payouts (and in cash).
The sale proceeds from the sale will be used to top up your CPF Retirement Account (RA), based on the current CPF Full Retirement Sum. You will then have to join CPF LIFE if you haven’t already done so to receive a monthly income from your CPF LIFE every month.
If you’re the sole owner of the HDB flat, you’ll need to use the sale of the proceeds to top up your CPF RA first based on the current CPF Full Retirement Sum.
If there are 2 or more owners, then each owner will have to use their share of the proceeds to top up their respective CPF Retirement Accounts according to the current age-adjusted Basic Retirement Sum (BRS).
For example, here’s the amount you’ll need to top up if you were to apply from 1 Jan 2021 onwards:
Eligibility age (currently 65) – 69
70 – 79
80 and above
If you have already hit the Basic Retirement Sum, however, you can receive the proceeds in cash (up to $100,000) instead of a mandatory top-up to your CPF RA.

Who’s Qualified for the Lease Buyback Scheme?

As with all HDB properties, there are a few criteria that you’ll need to meet to be eligible for LBS:
Condition to qualify for the Lease Buyback Scheme
Both you and your spouse must have reached the eligibility age. This is currently set at age 65.
At least one owner must be Singaporean
Gross monthly household income of $14,000 or less
Flat type
All flat types (except short-lease flats, HUDC, and executive condominiums)
Property Ownership
You do not own a second property
Minimum Occupation Period (MOP)
You and your spouse must have been living in the flat for at least 5 years
Minimum Lease
Remaining lease of at least 20 years of lease to sell to HDB
Besides the basic eligibility criteria for the lease buyback scheme, you also need to have enough lease to sell back to HDB. The lease period required depends on the age of the youngest owner between you and your spouse.
According to HDB, you’ll need to retain enough lease to live in your flat till age 95 based on the age of the youngest owner. If you feel that you don’t need as much cash, you can also choose to sell less lease back to HDB if you prefer. For example, if the youngest owner is aged between 70 to 74, you can do the lease buyback and keep your HDB lease for anywhere between 20 to 35 years in 5-year chunks.
Eligibility Age (currently 65) – 69
70 – 74
30, 35
75 – 79
25, 30, 35
80 and above
20, 25, 30, 35

Pros of the Lease Buyback Scheme

1. You Get the Lease Buyback Scheme Bonus

The main draw of the Lease Buyback Scheme is the Lease Buyback Scheme Bonus. Basically, the Lease Buyback Scheme Bonus is the amount of cash ‘bonus’ you’ll bag after topping up your CPF Retirement Account. You will receive the full bonus if the total top-up amount to your RA is $60,000 or more.
If not, you will receive a pro-rated bonus as follows:
$1 for every $2 top-up to CPF Retirement Account
$1 for every $4 top-up to CPF Retirement Account
5-Room or bigger
$1 for every $8 top-up to CPF Retirement Account
In other words, not only will you get the extra bonus from the Lease Buyback Bonus, but you’ll also receive monthly income from your CPF LIFE account in addition to the remaining sale proceeds in cash.

2. You Get to Receive Lifelong Payments in Cash via CPF LIFE

The proceeds of the sale of your HDB flat will be used to top up your CPF Retirement Account, and you’ll receive monthly income via CPF LIFE.

3. You Get to Continue Living in the Same Flat

If you’re the kind of person who prefers things just as they are, then the LBS could be the right fit for you. You’ll get to continue living in the same environment, neighbourhood and don’t have to ‘right-size’ from your spacious 5-room flat to a smaller 2 or 3-room flat.
If you don’t experience empty nest syndrome from your adult children moving out, having more space be great for you. Maybe you can dedicate a room to growing indoor plants or even setting up a home gym!

4. You Don’t Have to Worry about Finding a Buyer

Selling your flat to a buyer who’s willing to pay the right price for your home is no easy feat. Especially for older flats with outdated or less well-maintained interiors, it can be difficult competing on the resale market with renovated HDB flats with luxurious, condo-like interiors. However, with LBS, you don’t have to worry about finding a willing buyer.
HDB is always willing and ready to buy back the lease from your HDB flat even if your place hasn’t been renovated for the last 40 years.

5. It’s Actually Quite Flexible

You get to choose the amount of lease you’ll want to retain, based on the age of the youngest flat owner.
Not only that, if you pass away (touch wood) during the lease period, your spouse or children living in the flat can either take ownership and continue living in the flat until the end of the lease period, or sell it back to HDB for compensation based on the remaining lease.
And if you outlive the lease, you won’t be left homeless as HDB will make the necessary arrangements for you and your family based on your health condition, financial situation and family support.

Cons of the Lease Buyback Scheme

1. You Can No Longer Sell Your HDB Flat

Under the Lease Buyback Scheme, you won’t be able to sell your HDB flat to someone else even if they’re offering you all the money in the world. You can’t even rent your flat out. As you can see, the LBS is catered for those who prefer to age-in-place, so it’s best to consider this before deciding.

2. You Might Not Get a Good Value for Your Flat

HDB calculates the value of your remaining lease based on the assumption the lease will decrease in value over time. Which means that there’s a chance that you might not get a good deal.

3. You Might Not Receive Cash for Your Retirement Needs

As mentioned above, the net proceeds from the sale of the lease will be used to top up your CPF Retirement Account (RA), and you can only retain any proceeds in cash if your RA has been topped up to the specified amounts. In addition, each household can only have a maximum of $100,000 in cash proceeds.
If there is any money left over after this $100,000 has been set aside, this money needs to be used to top up your RA further till the Full Retirement Sum. After which, you can then retain the balance.
Remember that the Full Retirement Sum increases every year. Currently, the amount is at $186,000 as of 2021. So for those who haven’t yet turned 55, there’s a chance that might not even have leftover cash after topping up your Retirement Account.
If your flat has multiple owners, you can only keep proceeds in cash after you and your co-owners have topped up your respective CPF accounts to the Basic Retirement Sum. It’s currently at $93,000 for those who turn 55 in 2021 and is expected to keep increasing.
So unless your CPF already has a substantial amount of funds in it, you might not get that much cash upfront from selling your HDB lease through the Lease Buyback Scheme. Although you’ll still get monthly payouts from CPF Life, there might be a situation where you’ll need money for large one-time payments.

Method 2: Right-sizing with the Silver Housing Bonus

Like the Lease Buyback Scheme, the Silver Housing Bonus (SHB) is another way to monetising your home to support your retirement years.
Whilst the Lease Buyback Scheme is for those who want to continue living at their current flat, the Silver Housing Bonus is for seniors who prefer to right-size to a smaller apartment (i.e. 3-room or smaller flat). This is more suited for those experiencing empty nest syndrome and who can’t bear the empty space.
To qualify for the SHB, you’ll need to top-up $60,000 from your net sale proceeds into your CPF RA and join CPF LIFE. If the top-up amount is lesser than $60,000, then the cash bonus will be pro-rated on a 1:2 ratio. In other words, you’ll get $1 in cash bonus from HDB for every $2 top-up made to your CPF Retirement Account. This will apply up to a maximum cash bonus of $30,000 (for $60,000 top-up).

Who’s Qualified for the Silver Housing Bonus?

In order to be eligible for HDB’s Silver Housing Bonus, there are a few criteria you need to meet:
Age, Citizenship
At least one owner is a Singapore Citizen aged 55 or above
Gross monthly household income is within $14,000
Existing Property
  • HDB flat (met Minimum Occupation Period for resale), or
  • Private housing of Annual Value of $13,000 or less; and
  • No concurrent ownership of second property
Property You Are Buying
  • 3-room (excluding 3-room terrace) or smaller flat from HDB or from the resale market;
  • Purchase price does not exceed selling price of the current/last sold property
Timeframe between the Housing Transactions
Booking of new HDB flat, or application to buy resale flat must be:
  • Before sale of existing property; or
  • Within 12 months of completing sale of existing property
Timeframe to Submit Application
Application must be submitted within one year from date of completion of the second housing transaction (sale or purchase)

Pros of the Silver Housing Bonus

1. You Get Cash Proceeds from the Sale and Cash Bonus from the Silver Housing Bonus

The most tangible benefit of the right-sizing is the fact that you can unlock value from your HDB while still qualifying for a cash bonus. With the Silver Housing Bonus, you can get up to $30,000 extra from HDB just by right-sizing. Plus, if you have sold your existing property at a good price, you will still have cash proceeds to meet your retirement needs.

2. You Qualify for Grants When You Right-size

If you are right-sizing to buy a resale flat near where your children live, you can qualify for the Proximity Housing Grant (up to $20,000) on your purchase. At the same time, you get to live in close proximity to your child for them to take care of you in your silver years.

Cons of the Silver Housing Bonus

1. You Will Still Need to Top-up Your CPF Retirement Account

Just like the Lease Buyback Scheme, the HDB mandates that you top up your CPF Retirement Account before you can receive the Silver Housing Bonus. That means you will have lesser cash proceeds from the right sizing.
However, unlike the Lease Buyback Scheme, you will likely still have enough cash proceeds to meet the cash requirement of your retirement needs. For example, a couple who are selling their 5-Room flat plans to buy a 2-Room Flexi flat. Given the relative value of a 5-room flat, more cash can be unlocked when you monetize your HDB.

Method 3: Rent Your Spare Bedrooms to Someone Else

Renting out your spare bedrooms is probably the most popular way for senior households to monetise their flat and earn passive income. Not only are you putting those extra bedrooms to good use, but you’re also providing affordable shelter for someone else.
To rent out your rooms, you’ll need to adhere to the following guidelines set by HDB.

HDB Eligibility Conditions to Rent out Your Bedrooms

You can rent out your spare bedrooms if you’re a Singaporean or Singapore Permanent Resident and have a 3-room or bigger flat, keeping in mind the number of bedrooms and occupants allowed:
4-room and bigger
Apart from that, you’re only allowed to rent to non-citizens legally residing in Singapore who are holders of Employment Passes, S Passes, Work Permits, Student Passes, Dependant Passes, or Long-Term Social Visit Passes. These passes must have a validity period of at least 6 months as at the date of application
  • Work Permit holders from the construction, marine and process sectors must be Malaysians
  • Tourists are not allowed to rent an HDB flat/bedroom.
Do note that the maximum rental period is 3 years if all the tenants are Singaporeans or Malaysians, and 2 years for non-Malaysian Permanent Residents and foreigners. You also have to abide by the minimum rental period of 6 months.

Pros of Renting out Your Spare Bedroom

1. You Still Have Ownership of Your Flat and Get Passive Monthly Income

Instead of selling part of your lease to HDB or right-sizing to a smaller flat, you get to continue living in your home while still getting passive income for your retirement years.

Cons of Renting out Your Spare Bedroom

1. You’ll Lose Some Privacy

Whilst in the past, you might have the home to yourself, now you’ll need to get used to seeing someone walking around the house while wearing a towel or experience a bit more noise at home (soundproofing your walls could be a good idea).

2. You Won’t Get Any Cash Bonus from HDB

While your friends can brag about receiving cash bonuses from the Silver Housing Bonus and Lease Buyback Scheme, you don’t have the same bragging rights.

3. You Might Not Get Any Rental Income

With no cash bonuses or CPF LIFE payouts, you might be relying on tenants to provide you with a steady stream of income every month.

Method 4: Renting out Your Whole HDB Flat

So, you want to live with your children and rent your HDB flat out? You’ll need to fulfil these conditions first.

Eligibility Conditions for Renting out Your Whole HDB Flat

Only Singaporeans can rent out their flats after fulfilling the 5-year MOP period. The number of tenants allowed is also limited according to your flat type:
Flat type
Total Number of Occupants
4 persons
4 persons
6 persons
6 persons
6 persons
6 persons

Pros of Renting out Your Whole HDB Flat

1. You Will Get More Rental Income

Compared to renting out your spare rooms, HDB rental prices for a whole flat will provide you with a much higher income every month, which will be more than enough to cover you and your spouse’s monthly expenses during your retirement years. In addition to that, if your property is located in a good area, it’s likely that you’ll see rental growth over time.

Cons of Renting out Your Whole HDB Flat

1. You Run the Risk of Having Bad (or No) Tenants

Non-paying or late-paying tenants are some of the most common problems faced by landlords, while tenants who cause lots of wear and tear or damage to your property is also problematic. Also, there’s a risk that you might have trouble securing tenants at all, which means that you would be periods where you won’t have guaranteed income.
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More FAQ on Monetising Your HDB Flat for Retirement

You can ‘right-size’ by selling and downgrading, rent our your flat partially, hop onto Lease Buyback Scheme or apply for Silver Housing Bonus.

You can try to appeal to HDB, but it’s unlikely you will be successful. Sell your HDB flat on the resale or open market to get more cash instead.

If you’re smart about it, collecting rent from investment property can be a good retirement strategy. Or consider investing in REITs instead.

Rent or buy depending on your needs. Factors to consider are if you move around a lot, if your children live abroad and you visit them often for the long-term, and so on.