HDB Lease Buyback Scheme: how the money actually flows before you see a cent

A common misunderstanding about the HDB Lease Buyback Scheme (LBS) is that it works like a monthly cash dividend on your flat. It does not. The proceeds pass through a fixed order, and for many households, very little is left over as cash by the time it reaches their hands.

A recent post on r/singaporefi puts the question sharply. Two retired parents in their early 70s jointly own a 3-room flat completed in 1979, with about 52 years of lease left. They already draw a CPF Retirement Account (RA) payout described as enough for a comfortable retirement. One parent wants to take up LBS for the extra monthly cash. Their adult child is trying to work out whether that actually delivers anything, and who gets to decide.

It is a clean illustration of where LBS helps, where it does not, and how the mechanics constrain the outcome.

The order the proceeds are applied

Under LBS, you sell the tail end of your lease back to HDB and keep enough lease to cover you to age 95. HDB pays for the portion you give up. That payment is not handed to you as a lump sum to spend.

It is applied in this sequence:

1. Outstanding housing loan. Any remaining loan on the flat is cleared first.
2. CPF Retirement Account top-up. The proceeds then go to top up each owner's RA, up to the relevant retirement sum. This is the part many people miss. The money does not appear in your bank account. It is converted into a higher monthly CPF payout for life.
3. Cash bonus and any excess. Only what remains after the loan and the RA top-up is paid out, partly as a one-off cash bonus and partly as additional monthly income.

So the headline "receiving cash every month" is true only when there is excess left after steps one and two. If the owners' RA balances are already at or near the prevailing retirement sum, step two absorbs most of the proceeds, and the cash that flows through is modest.

Why this family's case is weak

The parents already receive an RA payout sufficient for retirement. That is the signal that matters.

LBS exists to convert an under-monetised flat into retirement income for households that need it. When the RA is already topped up and the payout already covers living costs, the scheme has little room to add. Most of the proceeds would either re-enter an already adequate RA or be capped out, and the marginal monthly increase would be small relative to what is being given up: the back portion of a long lease.

This is the point worth holding onto. LBS is not a lever for extracting maximum monthly cash. It is a tool for households whose home equity is not working for their retirement. A family that is already comfortable is giving up lease value for a benefit they do not need.

There is also the inheritance angle. Selling the lease tail reduces what the flat can pass on or be sold for later. That is a fair trade when the income is needed now. It is a poor one when it is not.

Joint ownership means joint consent

The flat is in both parents' names. That is decisive.

When a flat is jointly owned, HDB requires the consent of all owners to proceed with LBS. One owner cannot sign off unilaterally, regardless of who paid the down payment or considers the flat theirs. Legal ownership, not financial history, governs the decision.

So if one owner does not agree, the scheme cannot go ahead. The child in the post has this part right: without both signatures, there is no LBS. The down payment story does not change the title.

How to think about the decision

Strip out the family dynamics and the test is straightforward.

LBS makes sense when:

• The flat's value is not otherwise funding retirement.
• The RA payout falls short of monthly living costs.
• The owners intend to stay in the flat for life and are not relying on selling it later.

It makes less sense when:

• The RA is already topped up, so proceeds mostly re-enter CPF rather than reach the owners as cash.
• The existing payout already covers retirement comfortably.
• The owners may want to sell or downsize, where a full resale captures more of the flat's value than a lease sale.

For owners whose retirement income already works, the more honest answer is often to leave the lease alone. The scheme is built for a need this household does not have.

If the numbers are close, ask HDB for a written breakdown of the expected proceeds, the RA top-up required, and the resulting cash bonus and monthly payout before anyone signs. The figures depend on the flat's valuation, the lease retained, and each owner's current RA balance, so a general estimate is not enough to decide on.