Buyers have become cheeky and money off is the credo of both buyers and sellers as incentives have become widespread.
There is hardly a new scheme on the market today that does not have them.
Lifestyle packages are among the most imaginative to be rolled out as developers attempt to lure deposits from hesitant buyers.
The “lifestyle package” that includes Waitrose vouchers, gym memberships, mobile phone bill payments, Tube and bus tickets, DVD rentals, council tax payments and a mortgage subsidy is offered if you take a new home at Ipsus in Wandsworth, SW18.
Certainly more novel is a £15,000 feng shui interior design package offered by Crest Nicholson at its GreatWest Gate scheme in Osterley, where an “expert” selects items and styles the home in an appropriate way.
Ski holidays are on the menu at Linden’s Water Colour development in Surrey. Buyers get a £5,000 ski holiday voucher. Nearer to home, George Wimpey is offering to kit out your new home with free carpets, furniture, kitchen appliances and removals - or you can have a discount voucher worth up to £17,500.
Barratt is dangling an array of sweeteners at schemes across London and the South-East, even offering its shareholders a loyalty bonus if they buy a property: five per cent off the purchase price on top of other incentives.
Combined with hefty price cuts - as much as 30 per cent - that most developers have been forced to make, many first-time buyers may decide now is the time to get on the property ladder. Housebuilders normally offer some perks to prospective buyers but incentives are gathering pace. “There are very few plots being sold that do not have some sort of incentive,” according to the Home Builders Federation.
Whereas in the past incentives were used to “close” a deal, they are now being used to entice cautious buyers to a development.
Industry estimates suggest there are about 20,000 finished but unsold homes nationwide. Approximately 10,000 are in South-East England.
Restricted mortgage finance has caused the paralysis in the market so developers are focusing on ways that make it easier for buyers to borrow. Although property values are falling, many buyers remain priced out of the market because lenders have withdrawn high-percentage loans.
Most big housebuilders are offering to lend buyers a quarter of the value of a new property interest-free for five or 10 years. This means buyers can get 100 per cent ownership for 75 per cent of the purchase price.
Buyers pay back the 25 per cent amount at the end of the deferred period or when they sell. Barratt’s scheme is called Head Start; Crest Nicholson’s is called EasyBuy, and Higgins Homes’s is Step Up. One such deal offered by Countryside Properties at Springhead Park, Ebbsfleet, allows buyers to purchase one-bedroom flats for £93,750.
Certainly the door is open for businesslike buyers to negotiate hard with developers. Now is the time to pick up not only a well-priced home with a few perks thrown in but also a better quality home than you could have afforded.
Cherry-pick the best development: buy a bigger or better designed home or one in a location that really improves your lifestyle.
One industry insider says: “Basically, builders will tailor a package of incentives according to what buyers want because they’re so keen to do business. For buyers who have a mortgage lined up and can proceed quickly, big discounts are available. “If you don’t ask you won’t get. It pays to be cheeky.”
It is worth haggling where the price is a little above the stamp duty thresholds of £175,000, £250,000 and £500,000. Parking spaces (anything between £15,000 and £75,000 in London) are another bargaining counter. Paid deposits and refunded legal costs are useful if you are a first-time buyer with little or no savings.
Angela and Samuel Fashanu, both 38, were renting a small flat in Tulse Hill and had abandoned the idea of buying, despite having a one-year old baby, Maria. However, they managed to get on the property ladder by taking advantage of incentives. Angela is a local government worker, while Samuel is a full-time MSc student.
The couple received incentives worth £5,500, plus Barratt waived the five per cent deposit required, enabling them to buy a two-bedroom flat for £230,995 at New South Quarter, Croydon. “It made a huge difference - the difference between owning and renting and being able to enjoy a good quality of life,” says Samuel.
Developers are also making much of “hassle-free” part-exchange, whereby you trade in your old home for a new one. It can be a convenient way out of the logjam - you can avoid dealing with estate agents and paying their fees. The main risk is that you get a reduced price for the home you are selling, possibly as low as 85 per cent.
A note of caution
By taking an incentive, buyers normally have less scope to negotiate a price reduction. You have to study the figures and decide whether the “incentive” is really worth it.
Last September, a new mortgage code came in to force requiring developers to specify the value of any incentive given to buyers, over and above the purchase price.
The aim is to ensure that mortgage valuations are transparent and reflect the true value of the property.
In the past, incentives included in the purchase price have resulted in properties being “over-valued”, says the Council of Mortgage Lenders.