Lease Buyback Scheme: A Step-By-Step Guide To Cashing Out

Unlocking your home’s value can be a powerful way to get your retirement income on track. Selling a portion of your lease back to HDB could do just that.

In Singapore, there are a myriad of options to boost your retirement savings. One of which is by tapping into your home’s equity for cash, otherwise known as the Lease Buyback Scheme (LBS).

In the best case scenario, LBS gives homeowners the opportunity to make a significant top-up to their CPF Retirement Account (RA), secure a perpetual monthly payout by joining CPF LIFE, keep the remaining balance in cash and receive an LBS bonus on top of that!

Let’s find out more about LBS and how you can grow your retirement funds through this government scheme.

But first, a brief recap

What is Lease Buyback Scheme? 

LBS is a government scheme that enables senior Singapore citizens (from age 65 onwards) to sell a chunk of their lease back to HDB and use the proceeds to effectively increase their retirement funds, all without having to right-size to a smaller home.

How does Lease Buyback Scheme work?

Sale proceeds	Must be used to top up your CPF RA up to the Full Retirement Sum (for sole homeowners) or Basic Retirement Sum (for joint homeowners) Buy CPF LIFE plan using CPF RA after top-up (total must be min. $60,000)
Balance of sale proceeds	Yours to keep in cash if there’s remainder after the CPF RA top-up
Cash LBS bonus	Up to $30,000 for 3-room flats or smaller Eligible only if CPF RA top-up is at least $60,000

Once you receive the proceeds, the juggernaut that is LBS contributes to your retirement income stream in more ways than one. 

Firstly, the proceeds must be used to top up your RA, up to the current age-adjusted Full Retirement Sum (FRS) if you’re the sole homeowner, or up to the Basic Retirement Sum (BRS) if there’s two or more owners. 

If you are below the age of 80 and you have at least $60,000 in your RA balance after the top up, you’re eligible to join CPF LIFE plus enjoy the perpetual income stream that comes with it.

Secondly, you will receive the full LBS cash bonus to keep, should the total top-up amount add up to $60,000 or more. However, if the amount falls short of $60,000, the LBS bonus will be pro-rated instead, depending on the size of your flat (the smaller the flat, the more you’ll receive).

Thirdly, if there’s any proceeds remaining after the aforementioned top-up, you’re able to keep it in cash — up to $100,000 per household. Should there be a surplus of cash after the $100,000 cut off, you and your co-owner(s) must top up the amount to the current FRS. If there’s any remaining proceeds after the final top up, it’s then yours to keep in cash.

How to cash out with Lease Buyback Scheme?

Step 1: Check if you’re eligible 

First thing’s first, there are a number of conditions to meet in order to qualify for LBS:

• Minimum age: 65 or older
• Singapore citizen
• Maximum gross monthly household income: $14,000 
• You must not own a second property 
• Your flat must fulfill its Minimum Occupation Period (MOP)
• Minimum length of lease: 20 years

Step 2: Make an eAppointment with HDB 

If you’re eligible, you can proceed to schedule a consultation with HDB to discuss the details of the LBS. This is all done online through the HDB website. Be sure to provide your particulars and schedule a convenient date and time for the appointment. If your property has more than one owner, ensure that all co-owners are present for this appointment.

During the appointment, HDB officials will discuss with you:

• The length of lease you wish to keep
• The potential proceeds you could receive through LBS

If you wish to proceed with your LBS application after this stage, the officials will assist you with your application.

Step 3: Apply for Lease Buyback Scheme

HDB will conduct a market valuation of your flat to determine the value of the lease sold. You can choose the length of lease you wish to sell and retain, but keep in mind that the lease you retain should be based on the age of the youngest owner. This ensures that you or your co-owner won’t be able to outlive the lease.

Another session will be arranged to inform you of the actual proceeds and monthly CPF LIFE payout you will receive through LBS. 

You’ll also be required to pay the following fees:

• Administrative charge: $100 (including GST)
• Legal fees: around $300 to $500

Step 4: Receive the proceeds 

This is when your RA goes cha-ching! A bulk of the proceeds will go towards your RA, which then enables you to buy a CPF LIFE plan. The top up requirements depends on the age of the homeowner, as seen in the screenshot below.

Step 5: Get the Lease Buyback Scheme bonus 

If the total top-up amount to your RA is more than $60,000, you will enjoy the full LBS bonus of up to $7,500 (for 5-room flats and bigger), $15,000 (for 4-room flats) or $30,000 (for 3 room flats and smaller).

But if the top-up amount amounts to less than $60,000, your LBS bonus will be pro-rated instead, and is calculated as follows:

Flat type	Pro-rated bonus you’ll receive
3-room flat or smaller	$1 for every $2 top-up
4-room flat	$1 for every $4 top-up
5-room flat or bigger	$1 for ever $8 top-up

What’s more, your LBS bonus will be directly transferred to your bank account.

Step 6: Keep the remaining proceeds in cash

Any excess above the RA top-up amount listed in Step 4 will be issued to you in a cheque. But keep in mind that each household is capped at $100,000 maximum in cash proceeds. Should there be a balance after setting aside $100,000, you and your joint owners will need to make one last top up to your individual RAs up to the FRS. After which, you can pocket the remainder (if any) in cash as well.

Read these next:
Home Equity: 5 Ways To Turn Your Home Into Cash
What Is A Home Equity Loan And How It Helps Tackle Debt
The When And How Of Refinancing Your Home Loan
How Much Can You Borrow For Your Home Loan?
Fixed vs Floating Home Loan Rates: Which One Is Suitable For You?

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By Marissa Saini
Your friendly neighbourhood cat enthusiast who enjoys not being broke. Spend less, save more is the name of the game. Firm believer that being financially savvy is not about the destination, but the friends you make along the way.

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