Monday, August 20, 2007

Sell the tail of the lease

Hi Mr Tan

The Prime Minister has announced that HDB will bear back the tail of the lease, and allow the 3-room flat owner to keep the next 30 years. Is this a good scheme? How much can the owner get for selling this tail?

REPLY

It offers another option for the HDB flat owner to raise money to live on. Assuming that the remaining lease of the flat is 70 years, the amount that can be obtained by selling the tail of 40 years (i.e. keeping the next 30 years) is, according to my estimate, about 33% to 40% of the current value of the property. It depends on the interest rate that is used for the calculation.

If the current value of a 3 room flat is $160,000, the sale of the tail of 40 years can bring between $53,000 to $64,000. Part of this sum can be received in cash and the remainder has to be credited to the Central Provident Fund account.

This is just my guess. Let us wait for the details, when it is announced by HDB.
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3 comments:

Anonymous said...

This is better than reverse mortgage.
For old people who wish to remain in
the same estate and on top of it to recieve money for living, this is a good option.

August 20, 2007 6:47 PM
Anonymous said...

Not necessary. For reverse mortgage, at least for other countries, you get to stay until you die. For this other option, when thirty years are up, you are at the mercy of the HDB then.

August 22, 2007 2:24 AM
Thomas Phua's Blog said...

Wow...is there a loop hole to sell tail end of the lease and re-invest?

Maybe a good thing to consider.

Sell the lease, liquidate, and some may use it to buy annuity, or help their children to get another property, etc....?

August 29, 2007 10:12 AM

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