New build House: discounts/incentives

Mentesimples

My husband and I are currently buying our first property, and it is all in a bit of a muddle at the moment. Obviously a mistake has been made, but I'm not sure if the error is on our financial advisor's side or if the sales executive is to blame.


The house was on the market for £265000 and as incentives they threw in the flooring, carpets and £1000 discount (we were told by the sales executive originally that this discount would go towards our deposit, although this is actually not written anywhere).


On the reservation form the purchase price is stated as £265000, the incentives are listed (turf, flooring, £1000 discount) and in the small print below it states we will be exchanging standard contract for £264000 (which I assume was because technically I would pay £1000 less from our side of the deposit).



All the mortgage and HTB documents have been requested for the purchase price of £265000 and it was all going forward OK. The lender valuation was done and to our surprise the house was valued on £264000, which according to the report is what the valuer was told on inspection the house was being sold for.


So now the sales executive is saying that our FA messed up and that the mortgage and HTB should have been requested for a purchase price of £264000, despite the reservation form clearly stating £265000 as purchase price in the header. My FA says they are wrong, that technically the lender undervalued the property so it should be sold for £264000 and that I should get £1000 discount on top of that. Looking deeper into the matter, all the documents we've got from the developers solicitors state a purchase price of £265000, which is making me think that the sales executive is the one that messed up. Regardless it seems like some changes are going to have to be made to all the documentation/mortgage request/HTB which is doing to delay everything, just before Christmas..



Our solicitor is looking into the matter but this is really stressing me out at the moment, so just wanted to get your opinion. What value should we have given to HTB/lender??

AdrianC

You're paying £264k for it.

So why would £264k not be the value?

Does it actually matter?

kingstreet

Was the £1,000 stated as a discount, or a cash incentive on the UK Finance Disclosure of Incentives form passed to the surveyor doing the valuation by the developer?

It should be £264,000 purchase price if it's a discount and £265,000 purchase price if it's an incentive.

From there, everyone knows what they should be doing.

sal_III

AdrianC wrote: »

You're paying £264k for it.

So why would £264k not be the value?

Does it actually matter?

It matters if the reservation form says £265k as the HTB uses that figure. They are particularly pedantic about all the numbers matching

Mentesimples

It is stated as a discount (I haven't seen the CML myself yet but that's what's states on the reservation form) but with a purchase price of £265000.


Basically both our lender and HTB were happy as Larry until the valuer was shown the CML at valuation stating (I'm assuming) agreed sales price of £264.000. Now we need to go back and change everything.. and sales executive is blaming our FA for messing it up when it clearly says £265000 the purchase price in our reservation form..


Surely agreed sales price and purchase price should be the same?



It's a paperwork nightmare.

kingstreet

A newbuild is usually expressed as list price, then any discount then the contract price.

As this is a discount, everyone should be working to a contract price of £264,000.

However, this from your opening post;-

we were told by the sales executive originally that this discount would go towards our deposit

is describing a builder cash incentive, not a discount.

BTW the "CML" is now the UK Finance Disclosure form I mentioned earlier.

Mentesimples

Well, our solicitor seems to think the purchase price should indeed by £265000 and is in discussions with our lender to see if they are happy to proceed with that (armed with CML). Despite everything else we already had ATP for £265000 so hopefully if our lender takes to this hopefully things will proceed.