London property company Telford Homes is offering to refund buyers if their new home falls below the price they paid for it (compared with Land Registry averages) - providing strong evidence of a cautious optimism spreading among home-builders, many of whom believe that the worst is over for their business.
The firm is offering the “price promise” when clients move into any house at Queen Mary’s Gate, a 498-home scheme in South Woodford, north-east London.
The guarantee is based on Land Registry price figures for the London Borough of Redbridge taken at exchange of contracts and again three years later.
“If the average figure has dropped, Telford will send a cheque to the owner for the same percentage fall applied to the value of their home,” says Sheena Ellwood, Telford Homes’s sales director.
“It means that if there is a five per cent dip in prices recorded by the Land Registry, the buyer of a £300,000 home would be given £15,000.”
Land Registry estimates of value have credibility because they are based on all property completions in the area, while other house-price indices are based on mortgage levels or “trend tracking” surveys.
Recent research suggest the fall in house prices is bottoming out. On the new-build front, stock levels are at a historic low, with several developers reporting that, on average, they have only 1.5 finished homes at each site. Top-rank house builders such as Barratt have already returned to new construction.
Telford Homes’s deal is intended as a confidence booster for buyers, offering them reassurance that they are not overpaying and can avoid negative equity.
Nine-acre Queen Mary’s Gate was once a student campus with unremarkable accommodation blocks. These have been replaced with a new gated housing estate in landscaped grounds and with 24-hour concierge.
Prices start at £225,000 for a one-bedroom apartment. For more information, call 020 8506 1955.