What a change one week made. The new 3-year wait for fresh permanent residents (PRs) before they can buy resale flats turned out to be the one cooling measure that had real bite. Sellers are now panicking, according to property agents, "Some sellers are so desperate for "whatever they can get" that they are even agreeing to sell their flats at zero COV." According to the Singapore Estate Exchange (SRX), the had trend started earlier: The number of zero COVs was 14 in January, and tripled to 49 in July.
National Development Minister Khaw Boon Wan once said 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. Khaw explained it thus:
"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" scam is traceable all the way back to "cash-back" schemes 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 - also referred to in the trade as "over invoicing". The cash surplus would then be illegally divided among the parties involved. Such offences are punishable by a jail term and/or a fine.
What the minister refused to address about the legality of COV, the free market has managed to tame. Khaw's last words on the subject were: "Clearer rules and regulations with penalties and strong enforcement will be enough to check any under counter cash payment." Khaw may have the luxury of time to come out with the penalties and strong enforcement, but ordinary folk can only hold out for so long.