Why some flats have zero COV

  Why some flats have zero COV The New Paper | Sat, Dec 31, 2011 By Lediati Tan HE HAS neither owed money nor has anyone in his family become a guarantor for a loan. The same goes for his neighbour. But that has not stopped loan sharks from disturbing the peace and quiet of his Jurong neighbourhood after his neighbour lost his identity card two years ago. First, his neighbour's house was splashed with paint several times. When that failed to compel the neighbour to pay up for what he did not owe, the loan shark sent chilling letters threatening to splash paint or set fire to neighbouring units. This made Mr A Chiam, 35, an engineer, worried because his five-room flat is right next door to his neighbour's flat. He then installed CCTVs outside his and his neighbour's flats. But that did not scare them off. On Dec 1, the loan shark sent a letter taunting them: "Don't think your house got camera we don't dare to do." To drive home the point, the letter came with images of different flats being vandalised. Said Mr Chiam: "I'm living in a nice environment with good neighbours, then this type of thing starts happening in my neighbourhood. "It's very disturbing and scary that they are using this kind of tactic to break this kind of harmony that we have." As he lives with his wife and two young children aged three and seven, he's worried for the safety of his family. He contemplated moving out, but decided against it. "Why should I move? I don't think I should move out because of this illegal loan shark when I have such wonderful neighbours," he said. There's also the concern over the value of his property. Added Mr Chiam: "Who would buy this house if they knew there was this kind of thing going around?" His concern is not unfounded. At a time when home owners are demanding cash-over-valuation (COV) in the tens of thousands, there are flats that make no demands for COV. Like the one property agent Cheah Kian Choong recently sold. Mr Cheah, 42, a property director at I-Realty, told The New Paper that a three-room Tampines flat was sold for $310,000 over a week ago with no COV. The seller had insisted that Mr Cheah tell prospective buyers of the flat's history of being a target of loan shark harassment. Target The flat had become a target after the seller's mother became a guarantor for a friend who had borrowed from loan sharks, said Mr Cheah. When the person failed to pay, loan shark runners came to splash paint on the unit's front door and the unit's number was scribbled on walls. Although the last incident of loan shark harassment took place two years ago, Mr Cheah said that the seller, a security guard in his 40s, insisted that he share this information with all prospective buyers. Mr Cheah said his client wanted to sell the flat as he is thinking of moving to Thailand to be with his girlfriend. Added Mr Cheah: "He's in the security line and he didn't feel it was right to not reveal this information. He's a god-fearing guy who believes in karma. "He wanted to make a voluntary disclosure to let people make an informed decision." Mr Cheah and the seller thought the low COV would be a huge draw despite the flat's history, but they were disappointed. Never mind that the 67 sq m flat in Block 223, Tampines Street 24 comes with two bathrooms, is just three bus stops or a 20-minute walk from Tampines MRT station, and is near a library and a polyclinic. Said Mr Cheah: "Out of 50 callers, 10 eventually came to view. About eight of them were very keen. But when I mentioned about the ah long (loan shark) case, all eight didn't want the flat." The initial COV of $18,000 was lowered to $10,000 after two weeks. Still, no one took up the offer and it was further lowered to zero COV after a week. The flat was eventually sold on Dec 18 to a divorced mother with four children who was on a tight budget and in need of a place to live because of her family situation. Said Mr Cheah: "He's trying to be honest, but he's being penalised for it. I think he could have easily gotten $20,000 more for the COV, which is not a small amount for a guy who earns about $1,500 a month." A check on HDB's website showed that a similar-sized flat in a neighbouring block was sold for $325,000 last month. The median COV for resale flats registered in the third quarter of this year for a three-room flat in Tampines was $33,000. Property agents contacted said it is rare for flats to be sold with zero COV in the current property market. In such instances, there is often a catch. A death may have occurred in such a flat. Or the unit might be very old and on a low floor. There are also instances where relatives are selling the flat to each other, hence the low or zero COV. Buying such flats means that you may inherit the problem, warned real estate agents. Said Mr Aaron Lin, a group director at Dennis Wee Group: "Whether it's lower or no COV, it's not worth the money. "Trouble does not have a monetary value. It's going to be a lifelong problem. Do you want people to come and harass you everyday?" It's a case of caveat emptor or "buyer beware", said Mr Eric Cheng, chief executive of ECG Property. "Buyers have to be aware of what they are buying. They should go the extra mile to find out more about the flat before they pay the deposit," he said. For Mr Chiam, who does not intend to sell his place at this moment, he hopes more can be done to address the issue of loan-shark harassment. Although there's been enforcement on the matter and the Moneylenders Act has been toughened to deal with harassment, Mr Chiam felt that it has not got to the core of the problem. He asked if more can be done at the community level to tackle the issue and whether laws need to be tougher on loan shark syndicates. "Trouble does not have a monetary value. It's going to be a lifelong problem. Do you want people to come and harass you everyday?" - Mr Aaron Lin, a group director at Dennis Wee Group This article was first published in The New Paper.