(London) Negotiating price on house: Help to Buy vs. Not

rtiempo

I work in London and recently spoke to a couple of colleagues who have both recently bought new builds in London.

One recently purchased a one-bed new build through Help to Buy. He did not receive any discount on the asking price whatsoever, though he suggested developers can sometimes agree to cover your stamp duty.

Interestingly, my other colleague who bought a two-bed new build that wasn't registered with Help to Buy was able to get a double digit % discount on the asking price for his property.

London property prices have started to decline in the past year or so, there's no secret to that, and New Builds are known to have a large premium (20% premium seems to be the consensus when I've looked around on the internet).

My question is - are you more likely to negotiate a lower house price on a property that isn't a Help to Buy property? It makes sense to me - from a developer's perspective, the Help to Buy scheme makes new builds affordable to a much larger range of potential buyers, so they know that if one buyer isn't readily able to accept an initial asking price, someone else will. On the other hand with developments not registered with Help to Buy, the pool of potential buyers is much smaller especially in this current market, therefore a buyer has more bargaining power to negotiate a lower price.

Or am I missing something? Comments much appreciated.

sal_III

I don't think it has so much to do with one property being HTB and the other not, but rather one Developer being much more desperate to sell than the other. Or in this particular case maybe even your individual negotiation skills.

Tugaville

I don't think Help to buy makes housing more affordable, it does however make them easier to obtain, IMO a bad deal, especially for people that bought since the Brexit vote.

kingstreet

rtiempo wrote: »

I work in London and recently spoke to a couple of colleagues who have both recently bought new builds in London.

One recently purchased a one-bed new build through Help to Buy. He did not receive any discount on the asking price whatsoever, though he suggested developers can sometimes agree to cover your stamp duty.

Interestingly, my other colleague who bought a two-bed new build that wasn't registered with Help to Buy was able to get a double digit % discount on the asking price for his property.

London property prices have started to decline in the past year or so, there's no secret to that, and New Builds are known to have a large premium (20% premium seems to be the consensus when I've looked around on the internet).

My question is - are you more likely to negotiate a lower house price on a property that isn't a Help to Buy property? It makes sense to me - from a developer's perspective, the Help to Buy scheme makes new builds affordable to a much larger range of potential buyers, so they know that if one buyer isn't readily able to accept an initial asking price, someone else will. On the other hand with developments not registered with Help to Buy, the pool of potential buyers is much smaller especially in this current market, therefore a buyer has more bargaining power to negotiate a lower price.

Or am I missing something? Comments much appreciated.

HTB doesn't improve affordability, as the future cost of the HTB loan is deducted from mortgage borrowing power; it negates the need for a 15% or 20% deposit you often find necessary on a newbuild flat.

Do some comparisons. Find the lenders who will lend 90% or 95% on a newbuild flat, compare the rates and costs with HTB and remember there is a Government HTB affordability calculator which often has a lower affordable mortgage amount than a lender would offer on a non-HTB property.

Crashy_Time

Tugaville wrote: »

I don't think Help to buy makes housing more affordable, it does however make them easier to obtain, IMO a bad deal, especially for people that bought since the Brexit vote.

When the bankers and government dreamed up the scheme with the developers round a meeting table somewhere they called it Help To Borrow, obviously the name had to be changed to something more appealing to mortgage borrowers before they launched it though.