Forum: Valuation process and option fee for resale flats ensure fairness in transactions

We thank Mr Zhang Jinwei for his feedback (Relook practices governing resale of HDB flats, Sept 18).

HDB resale transactions are conducted on a “willing-buyer-willing-seller” basis. After a resale price has been agreed upon, the flat sellers will grant an option to purchase (OTP) to buyers, who pay an option fee of up to $1,000 in cash. When buyers exercise the OTP, they will have to pay an option exercise fee. This, together with the option fee, is capped at $5,000 and forms the deposit for the flat.

Flat buyers who decide not to exercise the OTP will forgo the option fee paid to the seller. The option fee is kept affordable for flat buyers while safeguarding flat sellers’ interests.

Flat buyers who wish to use their CPF savings and/or secure a housing loan for their flat purchase must request a valuation of their flat from HDB before exercising the OTP. The assessed value will determine the limit(s) on CPF usage and/or the housing loan amount, and is not intended for negotiation or marketing purposes.

If a valuation is required for a flat, HDB will appoint a private valuer from HDB’s panel of valuers. These valuers are independent and must have a valid appraiser’s licence to appraise land and buildings in Singapore. As members of the Singapore Institute of Surveyors and Valuers, the professional body for property valuers in Singapore, they also have to abide by the institute’s code of conduct and ethics.

Mr Zhang highlighted the importance of considering flat attributes and market changes when assessing the market value of an HDB flat, instead of relying solely on transacted resale prices of similar properties/flat types in its vicinity. This is the current practice. Using the recent resale transactions as a reference, valuers will make appropriate adjustments to account for attributes such as location, lease, floor level, size, renovations and orientation, while considering the prevailing market and economic conditions to derive the assessed value of a flat.

The valuations are conducted independently under established international and local valuation principles and practices which apply to both private and HDB residential valuations. 

Sia Tze Ming
Director (Policy and Property)
Housing & Development Board