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New build incentives

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 15. June 2023

Interested in speaking to mortgage brokers about builders offering new build incentives and whether it is getting more popular. 

  • What kind of incentives are you seeing in the market right now? Who are they aimed at? 
  • Are they more common than they have been previously? 
  • What advice would you give to your client about new build incentives and why?

5 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
We always recommend that any potential buyer should get in writing what incentives are on offer to them, before they sign any paperwork. Lenders have similar policies on what they will allow, typically those financial benefits that have a monetery value, such as no stamp duty, a cashback or deposit paid, will prick the ears of the surveyor and lender, but non-monetery items such as carpets, lawn and upgrades are not that important. There have been plenty of adverts locally suggesting innovative ways to subsidise mortgage payments, and reduce costs, but we would aways suggest they are checked by us first. Too many incentives, and the surveyor will reduce the valuation of the property.
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Gary Boakes
Director at Verve Financial
Help to buy going was a massive blow for house builders and FTB, the government missed an opportunity in the budget to try an create a new scheme for new build, with deposit unlock being the only scheme which has been largely disappointing. Builders are now going old school with incentives to entice buyers, the most common being stamp duty and 5% deposits aimed at home movers and first time buyers that may need a help
Getting to a 10% deposit. My recommendation to anyone that buys new build is remember you are negotiating with a business, there is no emotion attached from the seller, so do your research and make a good list of what incentives you want and negotiate, you may find different builders in same site, again negotiate between them, what the worse they will say- no you can’t have an outside tap, but here is stamp duty, solicitors fees and carpets.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
When I speak to clients about incentives, I'm always at pains to point out that things like flooring, white goods, or an upgraded kitchen pack are great. However, if the incentive is something like the developer paying the legal fees, but only f you use their solicitor, or they'll cover the mortgage broker fees, but only if you use their broker; then beware. The solicitor and the broker should be working in your best interests as the buyer; but if they have a relationship with the builder and receive lots of business from them, plus the developer is the one paying their bill, how can they not be conflicted?
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Gary Bush
Financial Adviser at MortgageShop.com
We aren't really seeing any lift in builder incentives being offered to clients to capture buyers attention, most builders seem to have enough buyers but are travelling down the same mortgage rate nightmares that non new build properties are. It's true that builders seemed shocked to the end of Help to Buy and don't seem to have any appetite to move to bringing any major new and meaningful offers to buyers.
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James Vince
Managing Director at Castle View Finance
Builders' incentives have always been a consideration in the new build market with deposit support contributions and part exchanges and of course, the government-supported Help to Buy (H2B) scheme that has been phased out to a fashion. However, the new and most exciting product to appear in the market is the government's first home / Discount Market scheme, where discounts and support are held with the home equity of the property, allowing the buyers a reduced mortgage with discounts up to 50% in some circumstances. Of course, with some regulated requirements and guidelines, it is by far an improvement on the H2B.

The lenders look at the standard incentives with a pinch of salt and only consider a true market value against LTV, so big discount doesn't necessarily form a better position unless supported with the scheme mentioned nor will carpets or mortgage payment support the lenders when underwriting or matching criteria.