Incentives when buying a new build home with 'help to buy' scheme

aisha13

Hi everyone

I want to buy a new build house from Persimmon. I negotiated the price of £240000. I also want them to pay for stamp duty on my behalf but they said they can't do that as I'm using 'help to buy scheme'. They said they can't give any incentives, which means they lied. Can anyone advice on that please?

Freeeeee

Hi we have just moved into to a Charles Church new build using the help to buy scheme. It's a good idea to talk directly to your local help to buy scheme agent you can find this on the help to buy website as well as your mortgage broker. We did and found out the facts rather than the sales "excuses".

The help to buy scheme will allow a maximum of 5% of the purchase price in the form of incentives. And this can include financial incentives such as stamp duty contributions, gifted deposits and legal fees as well as carpets, upgrades, turf etc Although this can not be in the form of cash back.

HOWEVER..The more important factor is what your help to buy mortgage lender will allow. Some of them will not accept stamp duty, others put other restrictions on the incentives. Some will even take the incentives into account in the valuation process. Secondly developers are under no obligation to offer incentives, and new build developers appear to be doing well on the back of the help to buy scheme thus it will largely depend on the popularity of the site, whether they have stock properties they are keen to sell and the time of year in relation to the financial year.

We know that people who bought off plan in our street did not get any incentives or any reduction in purchase price buying off plan but we bought ours just before end of financial year and house was already built so we seemed to get much more offered to us (after negotiations!)

Good luck!

Sparx

Developers were actually all sent correspondence recently they are not allowed to discriminate (i.e. not provide incentives) to HTB scheme buyers. It is of course still under their own discretion if they give you ANY incentives, but they can't provide the reason as due to you purchasing with a HTB mortgage.

My mortgage broker explained to me that most lenders with HTB will allow white goods, carpets, turf, etc (non-financial incentives) and stamp duty paid up to 1% of the purchase price.

Hope this helps.

Thrugelmir

Developers pay a contribution towards the HTB scheme. Hence the reluctance to offer further discounts.

ethank

It depends on the mortgage lender. We originally went with Halifax, and they would not accept our stamp duty paid, so we moved to Nationwide who would. Then our HTB Agent would not accept Stamp Duty paid, so we had to negotiate a price reduction

Thrugelmir

Unsure why they "lied". You've agreed a price for the property. Now you want a second bite of the cherry in your request to have the stamp duty paid. Along with using the HTB scheme.

ging84

Thrugelmir wrote: »

Developers pay a contribution towards the HTB scheme. Hence the reluctance to offer further discounts.

No
they did with first buy, not with help to buy

Sparx

Thrugelmir wrote: »

Developers pay a contribution towards the HTB scheme. Hence the reluctance to offer further discounts.

No they don't. HTB is purely government funded. The developer does not contribute a penny.

Thrugelmir

Sparx wrote: »

No they don't. HTB is purely government funded. The developer does not contribute a penny.

How do you think the guarantee is underwritten?

Certainly not 100% at taxpayers expense.

If all goes to plan then the taxpayer may well make a profit by the end. The alternative idea is for the fund to be sold onto an insurance company.

kingstreet

Just to clarify.

Builders contribute 3.5% of the property value to the indemnity fund under NewBuy. They contribute nothing under Help To Buy - Equity Loan, because there is no indemnity fund for that.

The loan is secured on the property.

Under Help To Buy - Mortgage Guarantee, the indemnity fund is paid for by lenders, via increased rates charged to borrowers. This is not currently available on newbuild.

Many lenders do not accept any cash incentives on newbuild, HTB or not. They simply reduce the purchase price/value by an equivalent amount. Those that do limit them, one accepts upto 5%, another only 1%.