We accept builders’ financial incentives on new build properties up to 15% of a property’s purchase price.
The purchase price won’t be adjusted for incentives unless the total amount of incentives is more than 5% of the price, in which case they’ll be deducted and lending will be based on the reduced purchase price (unless the property valuation is lower). For example:
Purchase price of the property
|
£120,000
|
Incentives total
|
£8,000
|
5% of purchase price allowance
|
£6,000
|
Incentives to be deducted from purchase price
|
£8,000
-£6,000
=£2,000
|
Reduced purchase price
|
£120,000
-£2,000
=£118,000
|
Portable and proportionate incentives acceptable in 5% allowance
Incentives such as carpets and curtains, along with financial incentives such as support with up-front costs such as stamp duty, legal fees or cashback or enhanced part exchange terms can be accepted in the 5% allowance.
Non-standard items that do not need to be included in 5% allowance
Incentives such as an upgraded kitchen or integrated appliances can be accepted as an incentive but do not need to be included in the 5% allowance. However, they do need to be listed on the UK Finance Disclosure Form. The costs of these items doesn’t need to be included.
Any item that’s provided as part of the standard specification for a property shouldn’t be listed on the UK Finance Disclosure Form unless an upgrade on the standard specification is offered free of charge.
Here’s a quick guide to which type of incentives need to be included on the form, if they need to be included as part of the Value of Incentives calculation and the rationale.
Incentive type
|
Rationale
|
Include:
|
Financial incentives (as defined in the UK Finance Disclosure Form) eg cashback, fees paid, Stamp Duty paid, and gift deposit from the builder
|
The purchaser might pay more for the property than they would without such incentives.
|
Non-financial incentives – non property related eg free car or property related but moveable eg free furniture
|
The purchaser may pay more for the property than they would without such incentives
|
Part-exchange
|
Include if the builder is paying above market value for the customer’s property, or covering all or part of the customer’s agent costs
Purchasers may be induced to pay more than market value if they are receiving an enhanced payment for their own property
|
Don’t include:
|
Non-financial incentives - property related fixtures eg kitchen upgrade, integrated appliances, landscaping, fitted floor coverings
|
These are reflected in the value of the property and do not encourage the purchase to pay more than market value
|
Discount on purchase price
|
The discount is already reflected in the agreed price and does not encourage the purchase to pay more than market value
|
