Paper 2 · HDB Policies
Monetising an HDB Flat for Retirement: LBS, Silver Housing Bonus & Right-Sizing
An older client says the same thing in every branch office in Singapore: *"my flat is worth $600,000 and I have almost nothing in the bank."* HDB's answer is a set of monetisation schemes that convert some of that housing wealth into retirement income. A salesperson is not a financial adviser and must not recommend one — but must know which schemes exist, who qualifies, and above all the question that sorts them: does the owner want to stay in the flat, or move out of it?
The four options, sorted by stay or move
| Option | Stay or move? | What the owner gets |
|---|---|---|
| Lease Buyback Scheme (LBS) | Stay in the flat | Sell the tail-end of the lease to HDB → CPF Retirement Account top-up + CPF LIFE payouts, an LBS bonus in cash, and any balance proceeds in cash |
| Right-sizing + Silver Housing Bonus (SHB) | Move to a smaller flat | Sell up and buy a 3-room or smaller flat → CPF RA top-up + CPF LIFE, an SHB of up to $40,000 cash, and the balance sale proceeds in cash |
| Rent out the whole flat | Move (e.g. in with children) | Rental income; needs HDB's approval and the MOP to be met |
| Rent out spare bedroom(s) | Stay in the flat | Rental income while continuing to live there; only from a 3-room or bigger flat |
1. Lease Buyback Scheme (LBS)
The owner sells the tail-end of the flat's lease back to HDB and keeps living in the flat on the retained lease. The retained lease must be long enough for the youngest owner to live in the flat until age 95. Part of the proceeds is used to top up the CPF Retirement Account and the owner joins CPF LIFE, producing income for life; the LBS bonus is paid in cash, and any proceeds left over after the CPF top-up may also be kept as cash. (The size of the top-up depends on the prevailing Retirement Sum and the starting balance in the Retirement Account.)
- At least 1 Singapore Citizen owner.
- All flat owners must be aged 65 or above — not just one of them. This is the single condition that most often knocks a couple out.
- Gross monthly household income not exceeding $14,000.
- The minimum occupation period must have been fulfilled.
- The owners must not own private residential property, or more than one non-residential property.
- After retaining enough lease to last the youngest owner to age 95, there must still be at least 20 years of lease left to sell to HDB. A flat with too little lease remaining simply has nothing to sell.
| Flat type | LBS bonus (cash) |
|---|---|
| 3-room or smaller | Up to $30,000 |
| 4-room | Up to $15,000 |
| 5-room or bigger | Up to $7,500 |
2. Right-sizing and the Silver Housing Bonus (SHB)
The SHB is a cash bonus for a senior who sells their existing flat *or private residential property* and buys a 3-room or smaller HDB flat. The owner must commit to a net increase of up to $60,000 in their CPF Retirement Account after right-sizing and join CPF LIFE. That net increase can be funded from the cash proceeds of the sale or from the CPF housing refunds — the CPF principal plus accrued interest that must go back into CPF on a sale anyway — which is why many seniors no longer need to find a cash top-up at all. The amount to commit depends on the net sale proceeds and is further capped by the prevailing Full Retirement Sum.
- At least 1 Singapore Citizen owner aged 55 or above — a decade younger than LBS, so a 58-year-old who is far too young for LBS can still take the SHB route.
- Gross monthly household income not exceeding $14,000.
- The existing property is either an HDB flat that has fulfilled the MOP for resale, or a private residential property with an Annual Value not exceeding $31,000. Yes — a private-property owner can qualify, which surprises most candidates.
- The owner must not own other private residential property, or more than one non-residential property.
| Existing property owned | Right-size to a 3-room flat | Right-size to a 2-room or smaller flat |
|---|---|---|
| An HDB flat, or a private residential property with AV of $21,000 or less | Up to $30,000 | Up to $40,000 |
| A private residential property with AV between $21,000 and $31,000 | Up to $10,000 | Up to $20,000 |
The natural destination for a right-sizing senior is a 2-room Flexi flat, which lets a Singapore Citizen aged 55 or above buy on a short lease of 15 to 45 years in 5-year increments instead of a fresh 99 years — priced accordingly, and with the chosen lease required to cover the buyers (and spouse, if any) to at least age 95. Work the arithmetic the way the exam does: a 58-year-old needs 37 years of cover, and because the lease comes only in 5-year steps she must take 40 years, not 35.
LBS vs SHB — the distinction that is actually tested
| Lease Buyback Scheme | Silver Housing Bonus | |
|---|---|---|
| Owner's home | Keeps the same flat | Sells it and buys a smaller one |
| Age | All owners 65+ | At least one SC owner 55+ |
| What is sold | The tail-end of the lease, to HDB | The whole property, on the open market |
| Existing property | An HDB flat | An HDB flat (MOP met) or private residential with AV ≤ $31,000 |
| Cash bonus | Up to $30,000 (smaller flats get more) | Up to $40,000 |
| Where the money goes | CPF Retirement Account top-up + CPF LIFE, balance in cash | CPF Retirement Account top-up + CPF LIFE, balance in cash |
| Income ceiling | $14,000 gross monthly household income | $14,000 gross monthly household income |
3. and 4. Renting out
The two rental routes are covered in full on the *renting out HDB flats* page, but note where they sit here. Renting out the whole flat requires the MOP to have been met and HDB's approval — and owners of Plus and Prime flats may never rent out the whole flat, even after their 10-year MOP. Renting out spare bedrooms while continuing to live in the flat is open only to owners of a 3-room or bigger flat, needs no MOP, but still needs HDB's approval.
The trap
Three traps. (1) **LBS requires *all* owners to be 65 or above — one 63-year-old co-owner disqualifies the household, however old the other is. (2) The Silver Housing Bonus needs an actual move.** An owner who stays put cannot collect it; it is paid for *right-sizing*, and LBS is the stay-put scheme. (3) The LBS bonus falls as the flat gets bigger — up to $30,000 for a 3-room or smaller flat but only $7,500 for a 5-room or bigger one. Candidates reliably guess it the other way round.
Exam takeaway
Ask stay or move. Stay → LBS (all owners 65+, income ≤ $14,000, MOP met, no private property, retain lease to the youngest owner's age 95 and still have 20+ years to sell; bonus up to $30k / $15k / $7.5k by flat size) or rent out spare bedrooms (3-room or bigger). Move → right-size to a 3-room or smaller flat for the SHB (one SC owner 55+, income ≤ $14,000, commit a net increase of up to $60,000 in the CPF RA, bonus up to $40,000) or rent the whole flat out. Both LBS and SHB end in the same place: a CPF Retirement Account top-up plus CPF LIFE, with the balance kept as cash.
Worked case study · Section B style
Mr and Mrs Chandra are both 67 and Singapore Citizens. They own a fully paid 4-room flat bought from HDB some 30 years ago, with about 62 years of lease left, and their gross monthly household income is $3,200. They own no other property. They want to stay in the flat but need a monthly income, and ask their salesperson what is available.
- (i) They may apply for the Lease Buyback Scheme — all the owners are 65 or above, the MOP is long met, and their household income is within the $14,000 ceiling.
- (ii) They must retain enough lease for the younger owner to live in the flat until age 95, and must still have at least 20 years of lease left to sell to HDB.
- (iii) Part of the proceeds tops up their CPF Retirement Account and they join CPF LIFE; the LBS bonus for a 4-room flat is up to $15,000 in cash.
- (iv) Because they are staying in the flat, they can also collect the Silver Housing Bonus.
- A.(i) and (iv) only
- B.(i), (ii) and (iii) only
- C.All four statements
- D.(ii) and (iii) only
Show answer & explanation
Answer: B. (i) is correct — every owner is 65 or above, at least one is a Singapore Citizen, the MOP is met, income of $3,200 is well within the $14,000 ceiling, and they own nothing else. (ii) is correct — the retained lease must carry the youngest owner to age 95 (28 more years at 67), and there must still be at least 20 years left to sell; with 62 years remaining they have about 34 years to sell, so the flat qualifies. (iii) is correct — the proceeds top up the CPF Retirement Account and they join CPF LIFE, with the 4-room LBS bonus at up to $15,000 cash. (iv) is the trap — the Silver Housing Bonus is paid for right-sizing: the owner must sell and buy a 3-room or smaller flat. A household that stays in its flat gets the LBS route instead, not the SHB. Hence (i), (ii) and (iii) only.
Apply it · the IRAC method
A 58-year-old Singapore Citizen widow owns a 5-room flat that met its MOP long ago. Her gross monthly income is $2,500 and she owns no other property. She wants to move to a smaller 2-room Flexi flat and free up cash for retirement, and asks the salesperson which HDB scheme she can use.
- IIssue: Which monetisation scheme is open to her at 58, what must she commit to in order to receive it, and what lease must she take on the 2-room Flexi flat?
- RRule: The Lease Buyback Scheme requires all flat owners to be aged 65 or above and is for owners who remain in their flat. The Silver Housing Bonus (SHB) is for seniors who right-size: at least one Singapore Citizen owner aged 55 or above, gross monthly household income not exceeding $14,000, an existing property that is either an HDB flat that has fulfilled the MOP or a private residential property with Annual Value not exceeding $31,000, and no other private residential property (or more than one non-residential property). The owner must sell and buy a 3-room or smaller flat, commit a net increase of up to $60,000 in the CPF Retirement Account (fundable from the cash proceeds or from the CPF housing refunds, and capped by the prevailing Full Retirement Sum) and join CPF LIFE. The bonus is up to $30,000 for right-sizing to a 3-room flat and up to $40,000 for a 2-room or smaller flat. A 2-room Flexi flat may be bought by a Singapore Citizen aged 55 or above on a short lease of 15 to 45 years in 5-year increments, and the lease chosen must cover the buyer to at least age 95. (Confirm current conditions and amounts with HDB and the CPF Board.)
- AApplication: At 58 she is a decade too young for the LBS, which needs every owner to be 65 or above — and in any event she wants to move, not stay. She fits the SHB squarely: a Singapore Citizen over 55, income of $2,500 far inside the $14,000 ceiling, an HDB flat past its MOP, and no other property. Right-sizing to a 2-room flat places her in the top band, so the bonus is up to $40,000, provided she commits the net increase of up to $60,000 to her CPF Retirement Account and joins CPF LIFE. On the lease, she needs cover to age 95 — that is 37 years — and because the short lease comes only in 5-year steps she must take a 40-year lease, not 35.
- CConclusion: Advise her that the Silver Housing Bonus, not the Lease Buyback Scheme, is her route, that the bonus rises to up to $40,000 because she is moving to a 2-room flat, and that a 40-year short lease is the shortest that will cover her to 95. The salesperson should give this as general information only and refer her to HDB and the CPF Board for an eligibility assessment and to a licensed financial adviser on the retirement planning itself.
Ready to test yourself?
Practise exam-style questions on HDB Policies — with instant answers and explanations.
Practise HDB Policies questions →Common questions
- What is the difference between the Lease Buyback Scheme and the Silver Housing Bonus?
- The Lease Buyback Scheme is for seniors who want to stay in their flat: they sell the tail-end of the lease to HDB, keep enough lease to live there until the youngest owner turns 95, and receive a CPF Retirement Account top-up with CPF LIFE payouts plus an LBS bonus in cash. The Silver Housing Bonus is for seniors who move: they sell their existing property, buy a 3-room or smaller flat, commit part of the proceeds to their CPF Retirement Account and receive a cash bonus of up to $40,000. LBS needs every owner to be 65 or above; the SHB needs only one Singapore Citizen owner aged 55 or above.
- How much is the Lease Buyback Scheme bonus?
- Up to $30,000 in cash for a 3-room or smaller flat, up to $15,000 for a 4-room flat and up to $7,500 for a 5-room or bigger flat. Note that the bonus is larger for smaller flats, because the scheme is targeted at lower-income households. Confirm the current amounts with HDB.
- Can an owner of private property receive the Silver Housing Bonus?
- Yes, if the private residential property has an Annual Value not exceeding $31,000 and the owner sells it and buys a 3-room or smaller HDB flat, subject to the other conditions. The bonus is lower for a property with an Annual Value between $21,000 and $31,000 — up to $10,000 for right-sizing to a 3-room flat and up to $20,000 for a 2-room or smaller flat.
- Does an owner have to move out under the Lease Buyback Scheme?
- No — staying put is the whole point of the scheme. The owner sells only the tail-end of the lease and continues to live in the flat on the retained lease, which must be long enough to last the youngest owner until age 95. There must also be at least 20 years of lease left to sell to HDB after that retention.
- How short a lease can a senior take on a 2-room Flexi flat?
- A Singapore Citizen aged 55 or above may choose a short lease of between 15 and 45 years, in 5-year increments, instead of a 99-year lease. The lease chosen must cover the buyer and their spouse, if any, to at least age 95 — so a 60-year-old needs at least a 35-year lease. Confirm the current options with HDB.
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