New Build, Help to Buy incentives

GeordieRacer_2

Hi all,

First post so apologies if my etiquette is poor!

I'm in the process of moving home and am in negotiations with a developer on a new build home. We are looking at using the 'help to buy' scheme which places the property in our reach (budget wise).

Basically, I need to know my limits for pushing them on price/incentives. I previously discussed with them some decent discounta and upgrades but then having spoken to her line manager, the saleswoman returned saying there was a cap to the incentives they could offer us becasue of the help to buy scheme. Apparently the solicitor qont consider our purchase if they offer any more than 5% of the list price in upgrades/discounts.

In real terms, this gives me £12, 250 in upgrades or discounts.

Personally, I'm finding the 5% cap hard to believe and think its a ploy from the developer to stand firm on a discount. Does anyone know if it's true?

Alongside that, is £12, 250 a decent figure regardless?!

Going back in this afternoon so any advice would be much appreciated. Thanks you all.

moneymort

From reading some of the other posts on here you seem to be lucky that they are still offering a 5% discount. Other people have reported that the developers have turned hard ball and no longer offer any discounts or incentives if purchasing with the help to buy scheme. Have browse through some other threads.

GeordieRacer_2

Thanks moneymort,

That's reassuring and good news (for me at least).

I think if I'd been told it straight away I'd be over the moon, but because I was told a bit more the day before, and then she returned apologising saying she'd forgotten the help to buy limit I feel a bit cheated and wondering...

Still, we love the house and estate and hopefully can get a fair few upgrades for 12k.

Cheers again.

DarkMatter

The line manager is correct. We've just had our application for HTB accepted (mortgage app went in on Weds!). I don't have the paperwork in front of me, but there's definitely something in 'the small print' about no more than 5% incentives.

When we were negotiating on our new build, we were offered 20k off the asking price if we went the HTB, or 5k discount plus stamp duty paid if we went with a straight mortgage. I think given the development in question and location (Oxfordshire), we did well. The sales office didn't have much experience with HTB, as only one buyer had used the scheme prior to us.

dgtazzman

I don't know at what level it has been decided, but there is an article in our HTB paperwork from the Homebuy agent printed boldly saying that the total value of any incentives and price reductions must not be more than 5% of asking price. I believe the mortgage providers all have this same term listed on the HTB mortgage agreements, so no, the builder isn't having you on, they are telling the truth.

We ended up with turfing/patio area, flooring, stamp duty paid and a garden shed, which nearly came to the 5% threshold.

kingstreet

Incentives are cash items, such as gifted deposit, stamp duty paid, legal fees paid etc and these cannot exceed 5%. These are entered on the "CML Form" provided to the lender's surveyor by the builder at the time of the inspection.

Some lenders don't accept them at all and will simply remove them from the valuation.

A price reduction is not part of the incentives, if it is just that, a straight reduction in the price from say, £300,000 to £280,000. That is a £20k price reduction and nothing more. You would tell the HCA HBA you are buying for £280k and your mortgage application would be for a mortgage on a £280k purchase price.

Other incentives, such as floor coverings, white goods, turf etc are ignored.

ging84

There is a 5% cap for incentives, this is 5% of the purchase price, not the list price, no one cares what the list price is, they could offer as much cash discount as they like

I certainly have over a 5% cash discount, this was accepted and does not show at all on my help to buy form

kingstreet

Yes.

There is confusion over the word "discount" reading some of the posts in the last few weeks.

A discount is a price reduction as I described earlier and as you have seen can be anything you can negotiate.

Cash incentives, which will remain within a higher valuation of the property, are limited to 5% of the agreed price.

This applies to newbuild generally too, not just on HTB - EL.

dgtazzman

Ah well, I'm holding my breath on the valuation of our new build. Their (Nationwide) regular surveyor is too busy, so they're now going to appoint another one. I have a nagging feeling it's going to come in at 5k-10k under asking price in line with the price of other 3-beds in the area, even though our house is larger in floor space than the 4-beds.

Would love to see what Barratt's does about it if it comes in low as there aren't really any comparables around.

strawberries1

dgtazzman wrote: »

Ah well, I'm holding my breath on the valuation of our new build. Their (Nationwide) regular surveyor is too busy, so they're now going to appoint another one. I have a nagging feeling it's going to come in at 5k-10k under asking price in line with the price of other 3-beds in the area, even though our house is larger in floor space than the 4-beds.

Would love to see what Barratt's does about it if it comes in low as there aren't really any comparables around.

What area are you buiyng in dgtazzman

evieeve

We're buying a Barratt new build with HTB in Derby and they said they couldn't lower the price due ot HTB already being a big incentive? instead they are giving us EA fees and all the flooring.
However the mortgage valaution has come in 15k lower than the price, so now we're having to wait for a second valuation! Barratt refuse to consider lowering it until the 2nd valuation is done.