THE government will hand out an additional cash subsidy to encourage elderly owners of public housing flats to join its proposed Lease Buyback Scheme (LBS).

About 25,000 HDB flat owners are already eligible for this scheme and the number is set to rise.

Speaking on the sidelines of the launch of the Housing and Development Board's Remaking Our Heartland exhibition yesterday, National Development Minister Mah Bow Tan said the government will 'top up the cash value' that flat owners receive after HDB buys back the tail end of a lease from them.

The value of a flat will be based on current market value.

The news comes two weeks after Prime Minister Lee Hsien Loong first said the government was working on a scheme to allow elderly people to monetise their HDB flats to provide them with retirement income.

Mr Mah said LBS could be finalised next year, around the time of the Budget debate in Parliament.

Elderly owners who sign up for the scheme will be left with a 30-year lease on their HDB flats.

Mr Mah said the scheme will pay cash from the buyback of a flat in three tranches - a lump sum, monthly payments for a fixed number of years and longevity insurance.

He also said LBS is likely to 'ride on the Central Provident Fund (CPF) scheme when it is ready'.

The onus will, however, be with HDB.

The housing board now has a bigger role, Mr Mah said: 'It is a provider of a roof over people's heads through the subsidies; it maintains value (of property) through upgrading schemes; and it is an old-age pension scheme as it were.'

He said the new Home Improvement Programme that replaces the Main Upgrading Programme 'gives residents what they want, and they pay less for it because the government is going to increase subsidies'.

Mr Mah also revealed that HDB has comprehensive plans to upgrade old, middle-aged and new housing estates, starting with Dawson Estate, Yishun and Punggol 21+.

Dawson Estate could see a 'new generation' of public housing designed by local award-winning architects, while Yishun's new town centre could be home to a large educational institution. The most ambitious plans are for Punggol 21+, which is envisioned as a waterfront community that could eventually have up to 92,000 flats.

Mr Mah said development of a town centre could start as early as 2010, when work to create new reservoirs there is completed.

A spokesman for PUB confirmed that construction work on dams to create reservoirs at Sungei Punggol and Sungei Serangoon started at the end of 2006 and will be completed in 2009.

So far, at least one commercial-cum-residential development site in Punggol 21+ has been identified for the Government Land Sales Programme and could be made available within five years.

Punggol 21+ will have a 60:40 public-private development ratio.

Noting that as a development model Punggol 21+ resembles Sentosa Cove in its infancy, property consultant Cushman & Wakefield's managing director Donald Han said: 'There should be some buyers looking to have the first-mover advantage there.'

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