Your search results

What Is Cash Over Valuation in HDB (COV)

Posted by Jayson Ang on November 8, 2023

| 0

TLDR

Cash Over Valuation (COV) in HDB resale flats occurs when the purchase price exceeds HDB’s valuation. COV cannot be covered by loans or CPF funds and must be paid in cash. Factors influencing COV include location, amenities, flat condition, and buyer’s urgency. HDB stopped publishing valuations in 2014, leading to a decline in COV cases. COV impacts stamp duty calculations. Buyers and sellers should consider these factors before agreeing on a price.

Cash over valuation (COV) occurs when the price of a resale HDB flat exceeds the valuation set by HDB. The difference between the purchase price and HDB’s valuation is known as the COV amount.

In the past, prospective buyers could easily access HDB’s valuation of resale flats on their website. However, since 2014, HDB has ceased publishing these valuations. Nowadays, buyers and sellers can only view HDB’s valuation after they have agreed upon a purchase price.

This means that there is no foolproof method to determine in advance whether COV will be required. Nevertheless, it is important to consider four key factors that influence the COV amount when purchasing a resale HDB flat. If you are interested in buying an HDB resale flat, continue reading before accepting the seller’s asking price.

What Is Cash Over Valuation (COV): An Example

The buyer’s COV can be determined by subtracting HDB’s valuation of the HDB resale flat from the purchase price, as shown in the example above (i.e. $530,000 – $50,000 = $30,000). This calculation provides the amount of Cash Over Valuation incurred.

Can HDB COV Be Paid With a Home Loan?

Your Loan-to-Value limit (LTV) determines the maximum amount you can borrow as a percentage of the property’s price. This limit is based on the lower value between the purchase price and HDB’s valuation of your HDB resale flat.

It is important to note that when it comes to HDB resale flats with Cash Over Valuation (COV), the purchase price is always higher than HDB’s valuation. As a result, it is not possible to include the COV amount in your HDB loan, bank loan, or even CPF Ordinary Account (OA).

In summary, COV cannot be covered by any form of loan or CPF funds. It must be paid in cash.

How HDB COV Affects Stamp Duty

Even though COV cannot be counted as part of the property’s price for home loans, it is considered when determining the amount of Buyer’s Stamp Duty (BSD) and Seller’s Stamp Duty (SSD) payable by buyers and sellers of HDB resale flats, respectively. This is because stamp duty is based on the higher of the two values: the purchase price and HDB’s valuation of your HDB resale flat.

This means that for an HDB resale flat sold at $530,000 and valued by HDB at $500,000, the BSD payable will be calculated as such (based on the Budget 2023 announcements):

Total BSD amount: $1,800 + $3,600 + $5,100 = $10,500

How to ‘Avoid’ COV for HDB Resale Flats

The exact amount of Cash Over Valuation (COV) for a specific HDB resale flat cannot be determined until both the buyer and seller agree on a purchase price. COV cannot be financed through home loans or CPF, and it is taken into account for stamp duty purposes.

Ultimately, property buyers in Singapore are looking to get the best value for their money. Many would like to avoid situations where they realize they have technically paid more than the HDB’s valuation for their resale flat.

So, what are some clear indications that you might be at risk of incurring COV?

Factors That Influence COV for HDB Resale Flats

1. Highly Sought-After Venue with Excellent Public Transport Connectivity

People are willing to pay a premium for flats located in desirable areas or with convenient access to public transportation. This is particularly true in Singapore, where owning a car is prohibitively expensive.

Flats situated near MRT stations or with multiple bus routes are highly sought after. The same applies to flats that are in proximity to the Central Business District (CBD) or city center.

2. Enhanced Access to Lifestyle Amenities

Convenience is highly sought after by all individuals. A residence situated in an area that offers a multitude of amenities like grocery stores, dining options, and recreational centers can fetch a higher price in the market. Moreover, parents with young kids may be willing to pay extra for homes located near reputable schools. Typically, older HDB resale flats in established neighborhoods tend to be more expensive due to the gradual development of amenities within the vicinity over time.

3. The state and layout of the HDB resale flat

Despite being older, the value of your HDB resale flat may not necessarily be lower. Potential buyers are less likely to offer a high price if the flat is in poor condition, as they would have to spend on renovations or repairs later on. Similarly, if a flat has undergone extensive renovations that the buyer does not like, they may not offer much.

In general, larger HDB resale flats tend to have higher asking prices. Certain types of HDB flats, such as maisonettes, are more expensive due to their limited availability.

If you want to estimate the value of your HDB resale flat, a useful approach is to research the prices of other similar listings in your area on PropertyGuru. Take note of how much they have sold for. This way, you can avoid undervaluing or setting an unrealistic price for your flat.

4. The Time Sensitivity of the Buyer’s Move

Buyers of resale HDB flats are often those who cannot or do not want to wait for around 3.5 years to get a BTO flat. Among this group, there are buyers who want to move into their new home immediately. Whatever the reason, expediting the sales process may result in the buyer accepting a higher price for the transaction.

Are HDB Resale Flats in 2023 Prone to COV?

Since 2014, HDB has ceased publishing their HDB resale flat valuations. As a result, sellers have lost the reference point to determine their asking prices. Consequently, COV prices have experienced a significant decline, with nearly 80% of all resale HDB flat transactions in 2016 being sold without COV.

During the peak of the COVID-19 pandemic, there has been a resurgence of COV in the robust HDB resale market following the circuit breaker period. This can be attributed to construction delays, the postponement of BTO projects, and the increased demand for larger homes. The typical range for COV figures is between $10,000 and $50,000. However, buyers have been willing to pay as high as $200,000 in COV for select flats.

It is important to note that COV can still occur if you make an overly aggressive offer or if you lack sufficient information. Therefore, it is advisable to secure the Option to Purchase (OTP) before obtaining the official valuation from HDB.

If you wish to obtain an estimation of resale flats in a specific estate, you can reach out to me to find out!

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

All Blog Posts Opinion

How to Maximise Your Home Value Before Selling : 6 Simple Steps

Jayson Ang – February 9, 2023 –

TLDR When looking to sell your home, consider simple ways to boost its value without costly renovations. Organize living spaces,...

All Blog Posts Buying Tips

Unlock The Key To Selling A Home With A Perceived Disadvantage Like Being West-Facing Or Close To A Rubbish Chute – Here’s How!

Jayson Ang – January 26, 2023 –

TLDR When selling your house, turn perceived disadvantages into advantages. For sun-facing homes, use UV sheets and blinds to manage...

All Buying Tips

Downpayment For Condo: How Much Do First-Timers Need In Singapore?

Jayson Ang – March 12, 2024 –

TLDR The blog post delves into the complexities of condo downpayments in Singapore in light of the impact of Covid-19...

Mandarin Top 5

Top 5 Tips: Gain an Edge in the Singapore Property Market: Steps to Boost Your Investment Returns

Jayson Ang – May 11, 2025 –

The Singapore property market has always been a hotbed for investors looking to make substantial returns on their investments. As...

All Buying Tips Opinion

5 Unexpected Factors That Make Some New Launch Condos Sell Like Hotcakes

Jayson Ang – August 9, 2024 –

TLDR The Singapore property market for new condo launches in 2023 saw varying degrees of success. Factors like limited competition,...

Mandarin Top 5

Singapore Sights & Sounds: 5 Must-Know Facts From the Little Red Dot

Jayson Ang – March 7, 2025 –

Singapore, affectionately known as the Little Red Dot, is a vibrant city-state in Southeast Asia that boasts a unique blend...

Mandarin Top 5

Top 5 : Benefits of Investing in Newer vs. Older Singapore Property Market Condos for International Buyers

Jayson Ang – January 4, 2025 –

Singapore's property market has always been an attractive investment option for international buyers, thanks to its stable economy, strategic location,...

All Opinion

Singapore’s Property Market: Will the Newly Proposed 2023 Cooling Measures, Including a 60% Foreigner ABSD, Make Waves or Mere Ripples?

Jayson Ang – April 27, 2023 –

TLDR The recent surge in Additional Buyer's Stamp Duty (ABSD) rates in Singapore targets mainly foreigners and entities, with rates...

Mandarin Top 5

5 Reasons : Why Singapore’s Rental Market Is Still Lucrative For Property Investors

Jayson Ang – June 8, 2024 –

Singapore's property market has always been an attractive investment option due to its stability and potential for high returns. While...

All Blog Posts Buying Tips

6 Secrets Foreign Investors Are Rarely Told About Singapore’s Real Estate Market

Jayson Ang – January 6, 2023 –

TLDR The Singapore property market presents unique characteristics that foreign buyers should consider. From the high rate of homeownership to...

All Buying Tips

5 Smart Techniques That Resourceful Homebuyers Utilize to Overcome Restrictions on Home Loans

Jayson Ang – May 16, 2024 –

TLDR When it comes to navigating the complex world of home loans and property acquisition, it's crucial to be aware...

Mandarin Top 5

Top 5 Boutique Shopping Streets in Singapore

Jayson Ang – July 22, 2024 –

Singapore, a cosmopolitan city-state known for its vibrant culture and diverse shopping scene, offers a unique blend of modern malls...

All Buying Tips Opinion

2-Bedroom vs. 2+Study Units: A Decade of Performance Analysis

Jayson Ang – May 21, 2026 –

TLDR Over the past decade, 2+Study units (compact 3-bedroom layouts) consistently outperformed standard 2-bedroom units in resale gains across most...

Mandarin Top 5

Top 5 Reasons : Is It Still Worth It For A Foreigner To Invest In Singapore

Jayson Ang – January 24, 2025 –

Singapore, a small yet prosperous city-state in Southeast Asia, has long been an attractive destination for foreign investors. Its strategic...

All Buying Tips Opinion

Navigating the Levels of Financial Well-being: From Basic Sustenance to Enduring Legacy

Jayson Ang – March 20, 2026 –

TLDR The journey to financial wealth involves progressing through seven stages, from Survival to Legacy, each with distinct goals and...

All Buying Tips Opinion

Strategic Patience: Why Some Singaporeans Might Benefit From Delaying Home Ownership, Even With Enhanced Grants

Jayson Ang – July 10, 2026 –

TLDR The Fresh Start Housing Scheme in Singapore now offers up to $75,000 in grants for eligible families buying shorter-lease,...

Mandarin Top 5

Top 5 Hawker Centres in Singapore for Local Food

Jayson Ang – February 24, 2024 –

Singapore, a melting pot of diverse cultures and rich culinary heritage, is home to some of the most delectable local...

All Reports

21 Condominiums with Landed Properties Available for Foreign Purchase in Singapore

Jayson Ang – November 17, 2025 –

TLDR Foreigners who want landed living in Singapore but cannot buy traditional landed homes (except in Sentosa Cove) can consider...

Mandarin Top 5

5 Things to Know About the Singapore Property Tax System

Jayson Ang – June 18, 2023 –

5 Things to Know About the Singapore Property Tax System Here are 5 things you need to know about the...

All Blog Posts Buying Tips

Discover 11 Helpful Tips for Buying an Older Condo : A Comprehensive Guide for Buyers

Jayson Ang – March 2, 2023 –

TLDR When considering purchasing an older resale condo, ensure you investigate potential en-bloc bids, lift conditions, parking conveniences, playground safety,...