We are about to enter one of the best times of the year to buy a property. The market is quiet, everyone is busy doing Christmas things, but builders need customers. They are keen to get rid of last year’s stock before the new year kicks off, and they know everyone will feel broke in January.
And unlike the past few good years, this year mortgages are becoming harder to get and the market is slowing down, with five interest rate rises over 18 months. So there will be incentives in place for buyers willing to give up a Christmas party or two to go scouting for a home.
Barratt Homes, for example, is offering guaranteed three per cent fixed-rate mortgages for two years at a number of its new developments. Most developers are reluctant to advertise price cuts, preferring to dress up reductions in the form of stamp-duty refunds, mortgage deals and paid deposits. But price discounts — possibly 10 per cent or more — are available if you haggle, according to one industry insider.
“We’re already seeing special offers thath are particularly attractive to first-time buyers who are ready to move and can complete before the year-end,” says David Bexon of property website SmartNewHomes.
The key to securing a good deal is to find a property that has to be sold — say, the last remaining home at a site the developer wants to move on from, or where the developer is under pressure to sell quickly, perhaps because its financial year-end is in December.
All housebuilders quoted on the Stock Exchange have to keep shareholders happy and need to demonstrate that sales targets have been met. Often there is a flurry of activity in the days before their reporting deadline, with eager sales staff willing to make offers. Companies with a December year-end include George Wimpey, Linden and Persimmon. Barratt has joined rivals Redrow and Bovis Homes and confirmed that the challenging market has hit sales.
Barratt, which reports half-year accounts in December, is offering three per cent fixed-rate mortgages for two years at sites in north and west London, including Wallis House, the Art Deco former Glaxo headquarters in Brentford, and Lockhouse, a canalside scheme in Camden. Prices are from £225,000 and £349,995 respectively. Call 020 8326 7277.
Demand in the capital is weakest for mid-market flats in the £500,000 to £1 million bracket, reports James Hyman of estate agent Cluttons. This is probably due to the credit crunch and reduced City bonuses. Canny buyers should be able to strike good deals in City-fringe locations.
Worth investigating is Number One Lamb’s Passage, off Chiswell Street, EC1. This scheme was acquired last summer by Nicholas King, an M25 commuter-home developer who might now be rueing the day he paid a top-of-the-market price.
Studio flats are being advertised from £350,000, one-bedroom flats from £427,500 and two-bedroom flats from £620,000. Call 020 7657 8371. The development of 80 flats is being built on the site of a former squash club, close to the Barbican. Completion is due in winter 2009.
Buyers who can act quickly are in the strongest bargaining position, so have your mortgage lined up and your solicitor poised to act. If you have yet to sell your home, doing a part-exchange deal with a developer may be an acceptable solution. Barratt is offering to pay 100 per cent of the value of a buyer’s existing home if they purchase a new one at Kenley Park, a leafy scheme of family houses close to Caterham on the Hill, Surrey. Prices are from £349,950 to £565,495. Call 020 8668 9277.
Gimmicky incentives, such as free holidays and cars, are not common because London buyers are perhaps too cynical. Ultimately, the only way to be sure a deal is a good one is to know the local market: which developments are selling well, which are struggling, which represent good value for money and which are offering genuine price cuts.
Clearly it is worth negotiating hard where prices are a little above the stamp-duty thresholds of £250,000 and £500,000. Parking spaces (anything between £15,000 and £75,000 in London) are another obvious bargaining counter. David Bexon believes that in the current climate, an ex-show flat could be bought for up to 15 per cent less than its market value. “A developer won’t want to keep a marketing suite open if it’s down to the last few apartments,” he says.
You have to ask yourself with “fag-end” developments why the remaining properties have not been bought already. Show flats aside, it is usually because they are the least desirable homes, perhaps at the rear of the development overlooking a car park. So you need to be sure of what you are getting, especially if buying off-plan, and not be totally driven by the sweeteners on offer.
It's great to have a new place
First-time buyer Daniel Dar-Nell got an early Christmas present when he secured a £21,000 reduction on a one-bedroom flat originally priced at £240,000.
Daniel, 25, is manager of Kingston Grammar School’s Queen Elizabeth II Theatre, in Surrey, and had been renting nearby before snapping up his new home at a development called Reflexion in Hounslow town centre.
“I had tried taking advantage of the Government’s first-time buyer initiative but kept coming up against huge stumbling blocks because I wasn’t a key worker or a council tenant,” he says.
“My parents were willing to put up a five per cent deposit and I managed to get Barratt to match this by saying I would buy there. I also asked them to throw in a few freebies, such as flooring, which they did.
“When the mortgage valuer visited, he said the flat was worth a little less than I had agreed to pay. This gave me more ammunition and I negotiated a further reduction.
“I love it here, and it’s great to have a brand-new place where nothing needs to be done. It’s a home rather than an investment but I’m confident I’ve bought the flat for a good price. Buying has got to be better than paying rent into a black hole.”
Prices at Reflexion start at £225,000. Call 020 8572 3668.
* Water Colour, a 500-home scheme in Redhill, Surrey. Developer Linden Homes is offering a pre-Christmas mortgage subsidy worth up to £18,000 over two years. Two-bedroom apartments are priced from £242,500. Call 0845 260 6606.
* Barratt’s Dream Start initiative enables first-time buyers to get on the property ladder without a deposit. They pay 75 per cent of the purchase price and the remaining 25 per cent is deferred interest-free for up to 10 years or paid back when the property is sold. Barratt pays £1,000 towards legal fees and stamp duty, and carpets and appliances are included. Available at schemes in Crawley, Harlow, Basingstoke and Reading; prices from £147,000. Call 01293 532771.
* Candlers Mews, Twickenham. Last three homes priced from £699,950. Michael Shanly, the developer, is offering to pay £1,000 a month mortgage subsidy until March 2009. Call 01372 225007.
* Queens Square, Maidstone. Bryant Homes will pay £600 a month into a buyer’s bank account for two years. Prices from £150,000 to £282,000. Call 0845 013 0728.
* Mosaic Apartments, Slough. Stamp duty, legal fees and five per cent deposit paid at this scheme by Durkan Homes. Prices from £152,995. Call 01753 518557.
* George Wimpey will pay a £600-a-month mortgage subsidy for two years on selected plots. Visit www.georgewimpey.co.uk.
* Persimmon is offering part-exchange deals plus £1,000 towards removal costs at developments in Abingdon, Borehamwood, High Wycombe, Stevenage and Bracknell. Call 0845 676 0183.