National Development Minister Khaw Boon Wan has clearly stated that he cannot abolish the cash premiums that HDB resale flat buyers must pay to sellers.
His announcement came as a reply to comments posted on his Facebook page on National Day. He explained that the Cash-Over-Valuation (COV) premiums are set by buyers and sellers themselves and thus, cannot be removed.
He added that removing the COV and having a professional valuer determine the price of resale flats was tried “years ago”. As a result, the “COV then went underground as ‘under counter cash payment’,” he wrote.
The debate over this policy started when Mr. Khaw posted his National Day message, after which comments trickled in, suggesting that the COV be removed as it is an “inflationary” factor.
He explained that the COV is the difference between the valuation of the flat provided by a professional valuer and the price agreed on between the seller and the buyer.
In July, the HDB announced that the nationwide overall median COV figure will no longer be included in its quarterly releases. Furthermore, it has also ceased publication of the overall median COV numbers for various flat types and housing estates. He noted that the data could be misinterpreted as there are other variables involved.
With regards to rising resale flat prices, he said the government has taken notice but the problem will be resolved in three to five years time, when Build-to-Order (BTO) flats are ready.
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