To help attract buyers, developers will often offer incentives that can make purchasing your new home more affordable or help reduce some of the upfront costs involved. Lets look into what may be on offer...
By the end of this chapter you’ll understand:
✓ What is a developer incentive and why do they offer them?
✓ How should you use the incentives on offer
✓ What incentives may be offered
Estimated Reading Time: 10 minutes
What is a developer incentive?
A developer incentive is anything offered by the housebuilder to encourage you to purchase one of their homes. Some incentives reduce the amount of money you need to spend yourself, while others add value by including upgrades or paying for certain costs.
Although these incentives can make buying a home more affordable, they may also affect how your mortgage application is assessed. For that reason, it’s essential that your mortgage adviser knows about every incentive you’ve been offered, even if it doesn’t involve cash.
Why do developers offer incentives?
Like any business, developers want to sell homes. Offering incentives can help buyers who may be struggling with upfront costs or deciding between different developments.
Developers may also introduce different incentives depending on:
This means the incentives available today may not be available in a few months’ time.
Why does my mortgage adviser need to know about incentives?
This is one of the most important parts of the buying process. Every incentive should be declared to your mortgage adviser and your lender. Why?
Because lenders assess the true value of the purchase.
If incentives aren’t disclosed, it could cause delays later in the application process. Being completely open from the beginning helps ensure your mortgage application progresses as smoothly as possible.
Can I negotiate incentives? – Sometimes. While the advertised purchase price may remain fixed, developers may have flexibility in other areas. For example, instead of reducing the purchase price, they may be prepared to include:
The incentives available often depend on the stage of the development, sales targets and individual plots. Your sales adviser will explain what is currently available.
What incentives might be available?
Every developer is different, but some of the most common incentives include:
Deposit Contributions – The developer contributes towards your deposit, reducing the amount you need to provide yourself.For example:
Purchase price: £300,000
Developer contributes 5% (£15,000)
You provide the remaining agreed deposit. This can make buying a home much more achievable for some buyers.
Flooring Packages – Many developers offer flooring throughout the property as part of the purchase. This could include:
Although this doesn’t reduce the purchase price, it can save you thousands of pounds after moving in.
Kitchen Upgrades – Depending on the stage of construction, you may be able to choose upgraded kitchen units, worktops or integrated appliances. These upgrades can help personalise your home without paying the full retail cost later.
Stamp Duty Contributions – In some circumstances, developers may offer to contribute towards your Stamp Duty costs. The availability of this type of incentive varies depending on the development and current market conditions.
Legal Fee Contributions – Some developers contribute towards your conveyancing costs. This may be offered regardless of which solicitor you choose or may only apply if you use the developer’s recommended conveyancer. Always check exactly what is included.
Mortgage Contributions – Occasionally, developers may contribute towards mortgage-related costs or other fees associated with purchasing the property. Again, these should always be discussed with your adviser.
Cashback – Some developments offer cashback on completion. Although this can be helpful towards moving costs or furnishing your new home, it still needs to be declared as part of your purchase.
Upgraded Fixtures and Finishes Depending on the stage of the build, you may also be offered upgrades to fixtures and fittings, for example, additional electrical sockets, outdoor taps, EV charging points, turf, bathroom upgrades etc.
Many buyers naturally focus on the headline incentive, but it’s worth considering the overall value. For example, a home with flooring, appliances, landscaping and legal fee contributions could represent better value than a larger cashback incentive alone.
Looking at the whole package, not just one figure, can help you make a more informed decision.
If you’re offered anything by the developer, tell your mortgage adviser.
Even if you’re not sure whether it counts as an incentive, it’s always better to mention it.
✓ Understand what a developer incentive is
✓ Understand why they offer incentives
✓ Understand what incentives can be used for
✓ Understand who needs to be told about the incentives offered
Next Chapter →
Reserving your home.
In the next chapter, we’ll explain exactly what happens during the reservation appointment, what you’ll need to do, the role of your solicitor and what to expect over the following few weeks.
