For many HDB Singapore homeowners, their home is built on lifelong savings. With the right planning, a financially comfortable retirement can be created with this asset.
While there are many ways to monetize an HDB home, here are four methods to consider when planning your golden years.
1. Sell back the remaining rent to HDB
If you are 65 or older, HDB’s lease buyback program is a great way to continue living in and monetizing your home. There is no need to change your lifestyle; The only difference is that you sell part of your lease to HDB for a cash bonus of up to $ 20,000.
The scheme allows you to keep the lease for up to 35 years as long as you cover the youngest owner until they are at least 95 years old. You will also need to fund your CPF retirement account with a portion of your proceeds. This will ensure that your CPF Life monthly income increases.
If you are not sure whether you will survive the rental period of your apartment, HDB will arrange an apartment that is adapted to your living conditions, taking into account your family support, your health and your financial situation.
If the HDB apartment owner dies within the rental period, the rental contract will be passed on to the spouse living in the same apartment or, if the apartment is returned, HDB will reimburse the entitled person for the remaining rental value, taking into account factors such as depreciation.
2. Take advantage of the Silver Housing Bonus Program
The Silver Housing Bonus (SHB) is another HDB program with which you can monetize your HDB apartment in order to financially support your retirement years.
This program is for those who prefer to downsize to a smaller apartment while depositing a certain amount of their cash proceeds capped at $ 60,000 from the sale of their existing apartment into their CPF Retirement Account (CPF-RA) . With this top-up, the program would offer a cash bonus of up to $ 30,000. However, in order to qualify for this program, you must meet the following criteria.
ALSO READ: 6 tips to maximize profits when selling your HDB apartment
How do you qualify for the Silver Housing Bonus?
| criteria | authorization |
|---|---|
| Age & Citizenship | At least one owner is a Singapore citizen aged 55 or over |
| income | Gross monthly household income is within $ 14,000 |
| Existing property |
|
| Real estate you buy |
|
| Time frame between apartment transactions | The booking of a new HDB apartment or the application to purchase a resale apartment must be:
|
| Time frame for submitting an application | The application must be made within one year of the conclusion of the second residential deal (sale or purchase). |
3. Rent the apartment
Another way to monetize your retirement home is to let it to the right tenants. In Singapore, as long as you are a citizen and have fulfilled the five-year minimum occupancy period for your HDB apartment, you can rent the entire apartment.
If your apartment has at least 3 bedrooms, you can rent out one or more free bedrooms while you are still living in the apartment.
Renting out your HDB can be relatively lucrative. According to The Straits Times, HDB rents rose significantly by 9.2 percent compared to 2013. This is a great alternative especially when you have another place to call home.
Median rent by type of apartment – first quarter of 2021
| HDB flat type | Medium rent |
|---|---|
| 3 room apartment | $ 1,650 to $ 2,200 |
| 4 room appartment | $ 2,000 to $ 2,700 |
| 5 room apartment | $ 2,200 to $ 2,800 |
| Executive apartment | $ 2,400 to $ 2,650 |
4. Sell your HDB apartment for a profit
You can easily sell your HDB apartment for a profit as long as you have purchased a brand new property. Even if you own an HDB resale apartment, there is a chance that, given market conditions, you will earn a substantial sum. Due to the current development of the real estate market, HDB resale prices rose by 2.8 percent in the second quarter.
This is a good option to consider if you already have another property, invest in another property, or want to invest in a different type of asset. If you are risk averse, you can benefit from opening the right high interest savings account to grow your finances for your golden years.
You can also benefit from trying a robo advisor as an alternative to the traditional wealth management advisor. Regardless of how you save for retirement, make sure to set yourself financial goals, do your research, and plan for the years to come.
ALSO READ: Is 2021 a Good Time to Sell Your HDB Apartment?
