Article 5

Nest-egg for elderly, low-income owners
Today Newspaper
Monday • August 20, 2007— Jasmine Yin

Not only will they get extra help to buy their first homes, lower-income Singaporeans will, in a possibly unprecedented public housing scheme, be allowed to unlock the value of their flats as hard cash in their old age. What's more, they can do so without having to move out.

Changes to home ownership schemes, long seen as a keystone of socio-economic policy, were announced by Mr Lee Hsien Loong as part of a wider plan to narrow the income gap and ensure Singaporeans a nest-egg.

The Housing and Development Board (HDB) will launch a scheme to help those aged 62 years and above living in two and three-room flats, and who have had just one bite of the housing-subsidy cherry.

The HDB will buy back the tail end of their flat's lease, assuming the lease period is more than 30 years.

So, if an elderly flat-owner has 50 years left in his lease, he can sell off 20 years to the HDB and stay on in the same flat for 30 years.

He will receive payouts in two parts: A lump sum upfront and monthly payments for the rest of his life.

The Ministry of National Development is looking at alternative arrangements in the event that a flat-owner outlives the 30-year lease period.

PropNex CEO Mohamed Ismail called the scheme "significant", citing how ageing flat-owners, because of their familiarity with the existing neighbourhood, often find it difficult to move out and downgrade, say, to a studio flat.

Low-income home-buyers feeling sidelined by a bullish property market will also get help owning their first homes.

An additional CPF housing grant introduced last year for low-income citizen households will be increased to a cap of $30,000, up from a $20,000 cap.

The household income ceiling will also be raised by $1,000 to $4,000 — enlarging the pool of applicants to about half of all households in Singapore.

Mr Lee stressed that home ownership is the "best form of social welfare for citizens because it gives every Singaporean a stake in Singapore's success".

Reply:
This is one significant new scheme implemented by the government this year. I believe that it would serve to be a great piece of news to all lower-income Singaporeans as well as the elderly who are applicable to this scheme. I feel that the part where the elderly are able to sell off the extra years of their lease for a sum of money, instead of leaving it behind and wasted when they pass on.

The monthly payments seemed the most surprising to me. It seems to be a good plan and lets the elderly have monthly income should something unexpected happen and they have an urge to spend the lump sum they had just received. Should they spend it all, they would have nothing left to live off, but this monthly payment scheme helps to prevent that from happening, and serves as a form of monthly income for them since many elderly people have retired and no longer receive income.

I do feel that the government’s efforts to help narrow the income gap, which concerns low-income Singaporeans and the elderly, who earn small amounts or possibly nothing. It is unfortunately not feasible to implement these schemes without funds, which comes from all the taxpaying Singaporeans. Taxing the wealthier population of Singapore would help to narrow the income gap and provide welfare services and schemes to the lower band of Singaporeans. It helps in the government’s aim to narrow the income gap, but it would also reduce the spending of other Singaporeans, who do not which to spend as much when the tax is higher. This of which might damage the economy which is largely based on people’s spending.

Overall, I still believe that the government has been doing a great job in providing welfare for Singapore citizens. I agree with the last paragraph in which Mr Lee said that home ownership is the best form of social welfare, and I feel that this scheme is able to achieve that goal fully and purposefully.