Fund Your Retirement With Your HDB Flat

Yes, your HDB flat can pay for your retirement. Find out how.

While we look forward to idyllic days when we finally retire, the truth is many of us may find our savings insufficient and retirement too expensive.

It doesn’t help that Singapore’s population is facing a double whammy: an ageing population and a declining birth rate. Around 11 percent of our resident population in 2014 was aged 65 years. This will increase to an estimated 20 percent by 2030. Our declining birth rate – just 1.19 births per female in 2013 – also means we will have a smaller pool of working-age citizens to support the elderly. While we have 4.5 working-age citizens per elderly citizen in 2015, this will drastically dip to just 2.1 in 2030.

What this means is – unlike our parents’ generation, who can count on their kids to support them – those of us retiring in the next decade or two will likely have to fund our own retirement. To help senior citizens – current and future ones – plan their retirement better, the Housing Development Board has schemes for them to monetize their HDB flat, which your elderly parents – or you, in the not-too-distant future – will find useful.


The most common and arguably easiest option – renting out a spare room or an entire flat – allows retirees to earn rental income without having to sell their home.

Currently, 290,000 HDB flats are owned by Singaporeans aged 55 or older; a whopping 80 percent of owners have fully paid for their flat. According to a 2013 survey conducted by the Ministry of National Development (MND), one in 10 citizens aged 55 years and above sublet their flat or a spare bedroom for a myriad of reasons.

As expected, the majority – two in five respondents – say they do so for additional retirement income, while 28 per cent need the rental earnings as they were in financial difficulty, or need it for their medical or other expenses. Interestingly, a minority (3 percent) chose to sublet a room because they want some company. Y.K. Chan, a widow, has been subletting the spare bedroom in her three-room HDB flat to a female Malaysian tenant for the last year. Still spritely, Y.K. prefers to live alone instead of moving in with her sons, who are married and have set up their own homes.

“They give me a monthly allowance, which covers my daily expenses,” she says. “I save the $550 I collect in rental income for medical emergencies and short trips with my friends.” She gets along well with her tenant and sometimes treat her to home-cooked food. An added bonus: “Although I’m still strong and healthy, it’s always good to have someone around the house to look out for me and contact my children in case of an emergency.”

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Elderly homeowners (Singaporeans or Permanent Residents) can sublet their bedrooms – the storeroom, bomb shelter and living room do not count – anytime they wish to tenants of any nationality, and for as long as they wish, without seeking HDB’s approval. They do, however, need to log their tenants’ details with HDB online ( within seven days of their subletting’s commencement

Do note that only owners of three-room HDB flats (or bigger) can lease out their spare rooms. Three-roomflat owners can rent out one bedroom, subject to a maximum number of six occupants in the entire unit. Owners of four-room or bigger units can rent out a maximum of two bedrooms (regardless of the number of bedrooms they have), housing a maximum of nine people. If you choose to sublet a whole HDB unit – only Singaporeans are allowed to do so – make sure you fulfil the Minimum Occupation Period of five years (or three years if you bought an unsubsidised HDB flat from the open market before Aug 30, 2010).

You need to seek prior approval from the HDB (, and each approved subletting period is a maximum of three years for Malaysian tenants or 1½ years for non-Malaysian folks. One- and two-room units can accommodate a maximum of four people; three-room flats, six; four room or bigger flats, nine. One more thing to note: A recent regulation came into effect from May 1, 2015 now disallows homeowners to sublet their HDB rooms or flats to workers in the marine and process sectors, including the chemical and pharmaceutical sectors.


First launched in 1988, these apartments were built and sold by the HDB to offer citizens aged 55 years or older the option to sell and cash in on their bigger homes. It is open only to Singaporeans and PRs, whose average gross monthly household income does not exceed $10,000. Married buyers must include their spouse in the application, though unmarried, divorced or widowed buyers can still apply for a studio apartment. Retirees can also choose to apply for such an apartment with a non-family member, provided that person is at least 35 years old.

These apartments, available in 36 sq m or 45 sq m, come with full amenities like floor tiles for the whole flat, wall tiles in the toilet and kitchen, window grilles, a built-in wardrobe, and a complete kitchen with cooker hood and stove. They also boast elder-friendly features such as grab bars and pull cords linked to an alert alarm system. On paper, a smaller, cheaper home for the elderly in a specially built environment sounds like a good idea. However, some buyers complain about the high prices, compared to a similarly sized two-bedroom build-to-order apartment. Besides the much shorter 30-year lease versus a two-room flat’s 99-year lease, buyers of studio apartments are also not eligible for HDB grants.

At the recent May 2015 BTO sales launch, a studio apartment in Tampines starts from $86,000. In comparison, a two-room flat in Sembawang costs $75,000. However, if the buyer receives the maximum amount of grants, it can be as cheap as $15,000. In 2013, a peeved Patrick Soh, 60, wrote to The Straits Times that his 47-sq-m studio apartment in a mature estate had cost him $168,000 while two-room BTO flats with longer leases were priced more attractively. The MND later clarified that both are very different products catering to different segments of the market and thus should not be compared. Still, this led to some property experts, such as Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants, to suggest that the Government should consider scrapping the studio apartments scheme or extend the lease beyond 30 years.

Unlike two-room flats, studio apartments cannot be sublet for rental income or resold on the open market. It must be returned to the HDB if the owner chooses not to live in it any longer. Buyers must also pay for the studio apartment in full (with CPF and cash) and cannot take a loan – a point that one senior citizen neglected when he applied for his studio apartment in 2011. Last November, local news website The Online Citizen One reported that the individual lost over $10,000 in deposit and fees on his studio apartment when he could not cough up the remaining $93,000 cash to pay for his $170,000 new home. If you are considering buying one, do note that like any HDB flat applications, you must sell your share in your existing home (HDB or private) within six months of taking possession of your new studio apartment. Otherwise, you’ll have to surrender the studio apartment to the HDB and face a forfeit sum of 5 percent of the purchase price, and/or any other amount set by the HDB.

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Similar to the studio apartment scheme, this also encourages elderly homeowners to downsize, but dangles the attractive Silver Housing Bonus (SHB) carrot. As long as you use some of your net sale proceeds to top up your CPF Retirement Account and join CPF Lifelong Income For The Elderly (CPF Life) to ensure a regular stream of retirement income, you can apply for the SHB. You’ll receive $1 for every $3 top-up, or up to $20,000 per household. Those who didn’t get any net proceeds – and thus did not top up their CPF Retirement Account – won’t receive any SHB.

Like the Lease Buyback scheme, the Right-sizing plan requires you to top up a minimum of $60,000 (or all your net sale proceeds if you received less than that) to any of the owner’s CPF Retirement Account (RA) before you can receive the rest in cash. If your net sale proceeds is between $60,000 and $160,000, you can keep up to $100,000 in cash. Received more than $160,000? You’ll first need to further top up the CPF RA of the flat owner with the lowest RA balance up to the prevailing full retirement sum (depending on your age, at a maximum of $161,000 for those aged between 64 and 69). Only then can you keep the excess cash on top of the $100,000.

This scheme offers more flexibility in terms of the flat size. Seniors can choose to buy a smaller (three-room or smaller) and cheaper flat from the resale market or directly from the HDB, as long as it’s a three-room flat or smaller, or a studio apartment. Those who prefer a four room flat have cried foul, but the HDB explains that this move is to encourage elderly households to move to a smaller home so as to maximise the sales proceeds from their previous property and build up their retirement fund.

To qualify, at least one owner must be a Singaporean aged 55 or above, with a maximum household income of $10,000. Your existing HDB flat must meet the Minimum Occupation Period for resale. If you’re downsizing from a private property, its annual value must be $13,000 or less (this scheme aims to help the elderly from lower-income households – hence those in more high-value private properties are excluded). Of course if you own a second property concurrently, you’re not eligible either.

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Also, your smaller HDB flat cannot cost more than the selling price of your existing property. That means you can’t “downgrade” from a cheaper four-room flat in, say, Jurong West to move to a pricier three-room apartment in a more central location like Redhill. As with all schemes, the four currently offered by the HDB each comes with its pros and cons. It’s never easy to adapt to change, be it accepting a stranger into your home when you rent out a room or choosing to downsize to a smaller flat, though seniors can choose to age in place and join the Lease Buyback scheme.

To pick the scheme best suited to your needs, find out more about these monetization methods on the HDB’s website (www.bit. ly/1xki1Zf) and make an appointment to speak to an HDB officer for more details.


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