Is this new-build cash back deal too good to be true?

Our lawyer, Fiona McNulty, explains the legal requirement to record the value of any cash back incentives offered by developers on the sale of new-build homes
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Question: We are buying a new-build house and the developer says that though we are paying £575,000 for it, he will give us £25,000 cash back to help pay for all the new furnishings. It all sounds great but are there any concerns we should have?

Answer: The cash back from the developer is an incentive for you to buy the house. As such, it does need to be dealt with properly by your solicitors who are under a duty not to be party to any mis-statement of the sale price.

The contract is likely to state that the price of the property is £575,000 but the terms of the contract will disclose the cash-back arrangement. Your solicitors must ensure that the transfer document shows the net price you will pay for the property, ie £550,000.

If you need a mortgage, your solicitors will obtain from the developers a Council of Mortgage Lenders disclosure of incentives form, which will detail the cash-back deal and any other discounts.

When getting everything ready for completion of your purchase, your solicitors need to submit a certificate of title to your lender. This is the document in which your solicitors request that the mortgage funds are released to them, and cannot be submitted until your solicitors are in receipt of the disclosure of incentives form.

It is very important that you keep your solicitors informed of all incentives and discounts which the developers offer you at the outset and throughout the transaction. Provided you do this, there is nothing to worry about and you can enjoy spending the cash you get back.

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If you have a question for Fiona McNulty, email We regret that questions cannot be answered individually.

Fiona is a partner in the residential real estate team at Thring LLP

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