COV cannot be removed: Khaw Boon Wan
National Development Minister Khaw Boon Wan said on Tuesday that the cash over valuation (COV) -- cash premiums -- for Housing Development (HDB) flats cannot be scrapped as such payments are set by buyers and sellers themselves.
His comment came after a certain Lee Soh Geok asked Mr Khaw on the latter's Facebook page why the minister is against abolishing the scheme, which has caused housing prices to rise in recent months.
COV is the amount a buyer pays over and above the valuation of an HDB resale flat to the seller. As it must be paid in cash, it has a significant impact on a property's affordability.
In response to Lee's query, Mr Khaw explained, "COV is the difference between (a) price of flat as agreed between buyer and seller and (b) the valuation of the flat given by a professional valuer. (b) is done by an objective professional. (a) is between buyer and seller.
"Abolishing COV means removing (a)? Then who sets the price? The professional valuer? Years ago, it was tried. COV then went underground as 'under counter cash payment'."
The "under counter cash payment" is with reference to "cash-back" schemes back in 2001, wherein buyers and sellers over-declared the agreed selling price in order for the buyer to get a higher loan either from a bank or the HDB. The cash surplus would then be illegally divided among those involved. Such offences are punishable by a jail term and/or a fine.
On the discussion thread, Lee then replied to Mr Khaw's statement: "Clearer rules and regulations with penalties and strong enforcement will be enough to check any under counter cash payment."
