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It's at the same height as the overflow. I'm replacing the valve as the (very) old one doesn't seal properly leading to a constantly dripping overflow (overflow pipe also needs replacing as it's perished but getting the cistern to actually stop filling seems more important). In theory, no I shouldn't need to seal it, in reality if the overflow is used then this hole will be too/first.
Does it need sealing? If that hole is below your waterline you’ve got bigger problems than the pipe material.