Haggling price of new build

TastyTeeth

droiderm wrote: »

My wife and I will be going down the NewBuy route.
I would be interested to hear anyone elses experience with negotitating with a NewBuy.

How long does the builder have the 3.5% tied up? Is it till the house is sold? Or is it until the mortgage reaches a certain LTV?

Halifax on a NewBuy will not allow any cash incentives from the builder. I think extras (carpets etc are fine) and negotiating the price down (but not the builder giving you 5k for example cash without taking it off the selling price).

As I understand it, the 3.5% is tied up in a holding fund for several years. The builder then gets the money back.

Cash incentives are not allowed at all. However, the builder can reduce the price of the property further. Incentives are allowed but at the discretion of each individual lender (who all have slightly different criteria).

From my own experience, once NewBuy is introduced into the equation, negotiating becomes very difficult indeed. I dare say that, once the property is complete, the negotiation gets a bit easier.

pinkteapot

The significance of their year-end is only if you can complete before then (so they've got the cash). As I said, may not be quite so useful with big national builders but still something to bear in mind. My friend got their deal on the proviso that they completed before the year-end.

If there's only a small number of houses and they're selling well then it's a risk if you wait rather than buy off-plan. Your bargaining position gets better as time goes on, but you run the risk of losing out. Depends on what the market's like in your area, what the prices of the new-builds are like compared to older houses, etc...

Mickygg

Pink teapot I'm not sure that's correct. I'm not up to speed with revenue recognition on property but I'm sure there is a case to apply revenue through the percentage of completion method, so if they have exchanged and built 50% of the house they could recognise this 50% as revenue.Therefore exchange is key not actual receiving of cash.

droiderm

Thanks Mickygg.

I would definately be interested in anyone elses view if exchange counts towards their targets. Would give us a bit of bargaining power.

2bFrank

If you are using any of the newbuy, homebuy or deposit incentives then unfortunately you will have no wriggle room on the purchase price as the builder knows you cannot buy the house without the incentive.

Remove these government incentives then the power is in your hand, the best bargains are to be hand when the development is near completion and the house is pretty much already built, also if its timed near the half year or full year end then you should get a very good deal.

As a side note if you are using any of the deposit incentives, you can get extras thrown into the house up to the value of £2000 without it affecting most mortgages, the best ones are carpets, alarm, blinds or tiling as the mortgage company will not be bothered by them. Lots of white goods etc will cause issues. I speak from experience.

droiderm

Thanks Frank. What kind of issues would the white goods cause?
When you say no wriggle room, you mean NO wriggle room?

I was thinking I could at least play one developer against the other?

Sorry for all the questions.