BUYING your first home is a huge, and expensive, decision but there could be ways to save thousands if you opt for a new-build property.
Developers are offering free extras and tantalising incentives to buy a new-build – and now we reveal the best way to haggle, and if these enticing offers are really worth it.
From no stamp duty to “free” fixtures and fittings, developers are now offering many incentives and extras to buy a brand-new home.
But some of these offers aren’t always as good as they sound, and you could get an even better deal if you’re prepared to negotiate.
Some critics say free extras and incentives are just masking high asking prices, as you can often get a similar sized property at a much cheaper price if you choose an older home.
And taking up these freebies can sometimes affect how much your mortgage provider is willing to lend you.
But new-builds come with their own advantages, such as low maintenance costs and being included in Help To Buy and shared ownership schemes.
We talk you through the best way to bargain with a house builder, as well as the signs that you could be being ripped off.
How to haggle – and what to ask for
Many developers will offer extras and incentives upfront.
But it could be worth negotiating further to see if there are any other freebies you can bag when buying a new-build home.
We asked property website Zoopla to give us their top tips for how to haggle with a developer, which we’ve shared below.
How to haggle with a developer for extras and freebies
FOLLOW these golden rules and you may have a better chance of snagging some great extras when buying a new-build home, according to Zoopla:
- Always be polite and respectful
- Respond quickly to any questions
- Write a list of questions before you meet a developer or look round a property, and ask them all
- Be confident, even if it’s all new to you
- Take a trusted friend or family member when you look around a property
- Emphasise you are in a position to move quickly
- Don’t be frightened to walk away if it’s not right – buying a home is a big commitment
These are some of the most common and most popular extras and incentives offered to new-build buyers.
Free stamp duty
One of the most common incentives developers are offering to new-build buyers is covering the cost of stamp duty.
This could save you potentially thousands of pounds.
But remember that first-time buyers don’t have to pay any stamp duty on properties priced at £300,000 or below anyway.
And first-time buyers who are buying through a shared ownership scheme don’t have to pay stamp duty on properties worth up to £500k.
For properties over £300k, first-time buyers pay a reduced rate of 5 per cent on the next £200k up to £500k.
But it could be worth asking for stamp duty to be paid if you’re not a first-time buyer, or if you’re negotiating for a more expensive property.
First-time buyers would have to pay £10,000 of stamp duty for a £500,000 home, or £15,000 if they’ve previously owned a home, so having a developer cover this cost would be a significant discount.
Commuting is expensive, but it’s inevitable for house buyers in London where property prices decrease the further away from the centre you travel.
That could explain why developer Bellway is offering buyers a free annual travelcard worth £1,648 on its Legacy Wharf development in Stratford, reports Which?
It sounds like a great perk.
Of course, you’ll need to be able to afford one of the pricey flats on the development, which start from £376,500 for a one-bedroom apartment.
That price includes a £40,000 discount – another incentive from the developer.
But you can get a similar sized property for a lot cheaper if you shop around.
Older one-bed flats sell for between £210,000 and £245,000 in the same area, saving buyers up to £166,000.
Asking price discount
Some developers are offering a discount on the asking price of a new-build home, which can be worth tens of thousands of pounds.
They can sound like a good deal, but it’s always worth comparing prices to make sure you’re not being sold a property at an inflated price.
Look at similar sized homes in the area that are being re-sold and see how much they’re worth.
If you’re only being offered a 10 per cent discount on a new-build and you could snap up an older home for 20 per cent less, than the discount may not be such a good deal.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The Government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
“First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
But remember that new-build homes tend to be slightly more expensive because you’re paying a premium for a home that’s never been lived in.
Developers claim it will have relatively low maintenance costs for the first few years.
New-builds often benefit from higher quality finishings, including mod-con features such as double or triple glazing, which can help lower bills too.
Having said that, it’s still worth shopping around.
And critics say that new-builds can often have what are known as “snagging” problems, which are minor issues with a property.
A builder has to fix these so it’s worth carrying out an inspection or a snagging survey before exchanging, according to property lawyers in-deed.
These can cost between £300 and £600, according to Which? magazine.
Free fixtures and fittings
Another common extra developers offer for buyers of new-builds is free furnishings, appliances and other fixtures and fittings.
They can be tempting, not to mention ultra-convenient as someone else is doing the work for you.
If you’re negotiating before the house is built or it’s at the “first fix” stage, you can even choose what finishings you want in some cases.
From alarm systems to wooden flooring, carpets and dishwashers, there are dozens of optional extras you can pick out.
If the developer isn’t offering these finishings upfront, you could try asking for them to be thrown in using our haggling tips above.
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Having them fitted before you move will save time and the hassle of shopping around and finding tradespeople to fit them.
But watch out, as though it will feel like these extras are free, the developer would have factored them into the property price.
Plus, some extras could be sourced cheaper yourself.
For example, a developer offering £5,000 worth of fixtures and fittings is only a good deal if you would have spent this sum of money on them yourself.
In addition, you won’t always have control over what fixtures and fittings you get – so always ask.
Paid-for legal fees
Some developers will offer to pay legal fees as an incentive to buy on their new-build development.
Legal fees can be in the region of £850 to £1,500 including VAT at 20 per cent, according to the Money Advice Service.
But just like with the other freebies on this list, be careful that the offer isn’t masking inflated property prices.
Do your homework, and make sure you’re not being ripped off.
Shared ownership schemes – where you buy part of a home and pay rent on the rest – can give buyers a foot onto the property ladder.
But one of the downsides is that you have to pay off part of the mortgage share that you’ve bought, and also the rent on whatever you don’t own.
There is also an annual service charge you’ll have to pay, which can be pricey.
Developers are sometimes offering to pay part or all of the rent for a limited period to incentivise buyers.
But often these deals are only for a few months, and then you would have to start paying rent – so remember to factor the full monthly fees into your costings.
Newbury Building Society is offering a rare 5 per cent deposit mortgage for first-time buyers.
Meanwhile, we’ve revealed the secret mortgage deals that banks won’t advertise that they’re offering to loyal customers.
There are some key questions you’ll need to answer when applying for a mortgage, which we’ve listed.