Advice on this Developer paying 10% deposit on properties...

master_ian

Hi All!

Has anyone heard of or dealt with Gainsbrook Developments Ltd?

I 've checked out their site as I'll be buying later this year and with a shock see that they're offering to pay NOT 5% (like everyone else), but 10% of the deposit on ALL properties....This is on top of stamp duty and legal fees up to 1k paid as well...
Apparently, the client has to pay £250 - £1000, reservation deposit, which is refunded after completion. They say they make their money because they buy all their properties OFF- PLAN and make their money on the diff. between their buying price and the selling price to us.

http://www.gainsbrook.co.uk/index.php?go=first_time_buyers

Seems to easy for me, anyone shed some light?

Ian

petegaffney

What you need to take into consideration is that the cost of the property you are purchasing is not over inflated, in comparison to similar (exisiting) properties within the area?

You have to ask yourself, if you were buying this property elsewhere (local), would it cost you the same amount?

Gifted deposits are a great solution for buyers who have little or no deposit, but if you are putting an extra 10% on your OWN mortgage to cover this, then you are not really being given a great deal back - apart from extra expenditure on your out going mortgage payments each month?

Ian_W

The other drawback, Ian, is that the "Gainsbrook Way" you have to use their mortgage advisor [whole of market? Fees?] and the lender they select [best rates? Tie-ins?]. So you may not only end up paying a higher price for the property by way of an inflated price to cover the 10% -you may also pay an inflated cost for your mortgage because you have to use their providers.

Personally I would be very wary!!

Pal

I haven't checked the wording but there is a large difference between "Paying a 5% deposit for you" and "Paying 10% of the deposit for you."

Check the wording of the deal carefully. Much better to save the deposit yourself and then knock the price down by 10-15%.

master_ian

Thanks for the replies, guys...
Just looking for ways as someone like myself with £160k for a flat and just 5% deposit to buy in London! (Tottenham...I'm also looking at!)

A few people go directly to developers and get discounts through them avoiding the middlemen, however, not many 1st-time buyers know how to do this. And what discounts common? Went to a mortgage advisor who told me they can discount up to 20% of the price of the property (when almost all are already sold).

Cheers.

nmiah786

I agree with what all others have said, make sure you dont fall into the trap of buying a property through a third party and getting a 10% discount on a over inflated price. Check that the list price they give you actually matches up closely to the open market value of similar properties in the immediate area. Ok newbuild will have a slight premium but that premium may not always hold afterwards.

Also, I dont see why you cant go and approach the developers directly yourself. If there is a deal to be done, you have nothing to lose. Whats the worse that the developers can say to you, NO!!! If you dont ask you dont get!!!

Have a look at the following development;

http://www.laing-homes.co.uk/LH/templates/homes-for-sale/LHDevelopmentOverview.aspx?region=North+Thames&devName=JeromeWalk&vs=

Its not in Tottenham but its close!!!

If you want a horror story, heres one.

Angel Square development in Edmonton, 2 bed flats were sold by the developer @ £180k with 5% deposit payed. The development has fnished a year ago. Now check Rightmove and see how much these flats are advertised for?!??! :eek: