Minimum Lease Period (MLP) refers to a flat/property with a remaining lease of at least 30 years but below 60 years. CPF can be used to purchase HDB flats/properties with MLP. However, there are additional conditions that buyers must meet in order to use CPF for flats/properties with a remaining lease of at least 30 years but below 60 years.
First, to use CPF for such flats/properties, an owner’s age plus the remaining lease of the flat/property must be at least 80 years. This is to ensure that the flat/property will last the owner until he/she is at least 80 years old, which is roughly the average life span of Singaporeans at birth.
Second, the total CPF that can be used by all owners who are eligible to use CPF is capped at a pro-rated Valuation Limit of the flat/property (the Withdrawal Limit). The pro-ration is determined by the ratio of the remaining lease of the flat/property when the youngest owner who can use CPF is 55 years old, to the lease at the point of purchase.
* Note: setting of minimum sum does not apply for such situations.
(The remaining lease of flat/property when the youngest owner is 55 years old) x Valuation Limit*
(The lease of the flat/property at the point of purchase)
The Withdrawal Limit (WL) is set at a level that covers the estimated
depreciated value of the flat/property when the youngest member using
CPF reaches the CPF withdrawal age of 55 years. This is to ensure
prudent use of members’ CPF savings towards the purchase of
flat/property with shorter remaining lease.
An example of how the WL is determined is shown below:
Example:
A 35 year old member buys a flat/property with 50 years of lease remaining. When the member turns 55 years old, the flat/property will have 30 years of lease remaining.
The pro-ration in this case is 30/50 = 0.6 (or 60%)
The applicable WL = Pro-rated Valuation Limit = 60% of Valuation Limit*
* Valuation Limit is the lower of the purchase price or the value of the flat/property at the time of purchase.
If you are buying the property with other co-owners, the age of the
youngest co-owner (who is eligible to use CPF) will be used to determine
the WL for the property.An example of how the WL is determined is shown below:
Example:
A 35 year old member buys a flat/property with 50 years of lease remaining. When the member turns 55 years old, the flat/property will have 30 years of lease remaining.
The pro-ration in this case is 30/50 = 0.6 (or 60%)
The applicable WL = Pro-rated Valuation Limit = 60% of Valuation Limit*
* Valuation Limit is the lower of the purchase price or the value of the flat/property at the time of purchase.
Example:
A, B and C are buying a property with 50 years of lease remaining. A is 35 years old, B is 30 years old, and C is 25 years old.
In this case, C is not allowed to use his CPF savings for the property as the remaining lease of 50 years will not last him till 80 years. Only A and B can use their CPF for the property, but the WL will be a pro-rated Valuation Limit (VL)*. The pro-ration is the ratio of the remaining lease when B (the younger of the two) is 55 years old to the lease at the point of purchase.
Hence, the pro-ration is 25/50 (or 50%) and the WL is 50% of VL.
* Valuation Limit is the lower of the purchase price or the value of the property at the time of purchase.
For easier reference, please refer to the attached diagram:
