Home Buyer Incentives - which ones are really worthwhile?

Home-buyer incentives – which ones are really worthwhile?

We look at the different incentives on offer for home-buyers, from the traditional to the wacky, and investigate which ones are the most valuable for both buyers and sellers.

If you're thinking of improving your home prior to selling it or have decided to stay put and spend the legal and stamp duty fees etc on improving your home, then don't forget to try and get more than one quote (preferably three) for comparison. You can get free, no obligation, online quotes for all your home improvements - from double glazing to driveways, loft conversions to solar panels at Home Improvement Quotes .co.uk - click here to try it now.

According to the Land Registry, the average house price peaked at £182,914 last year – more than seven times the average income, which according to the Office for National Statistics stands at £24,000. With this in mind, buyers are increasingly attracted by generous incentive packages offered on new-build homes. However it’s not just new-builds which have incentives attached – private sellers are also adding valuable extras to their properties in a bid to sell fast, and still achieve the full asking price.

First-time Buyers
Home-Buyer incentives have traditionally been targeted at first-time buyers, who would otherwise be unable to afford a home of their own. With many incentives this is still the case and there are various schemes which first-time buyers can take advantage of, including shared ownership, deposit schemes and percentage buys.

Shared ownership was originally set up to allow key workers, such as firefighters, police officers and teachers to afford a house close to their place of work. However with property prices rising, the scheme has been opened up to anyone with a regular income, provided they are unable to afford a house using the traditional buying channels. Under shared ownership, the home-buyer purchases a share of the property – usually between 25 and 75 per cent – by taking out a mortgage with an ordinary lender. The housing association or property developer will own the remaining percentage of the house, which the buyer will pay heavily subsidised rent on. The rent is pegged to inflation and is usually reviewed by the landlord annually – though most will cap the rent at a certain point. Each year, buyers are invited to purchase further shares in their property under a process known as ‘staircasing’, until they own 100 per cent.

Another incentive offered by new-build developers is a percentage buy, where the housing company will let buyers purchase 100 per cent of a new house, at only 75 per cent of the asking price. The buyer then repays the developer over a period of ten years or when the property is sold – and is charged no interest on the repayments. However the repayments are reflective of the price of the house, so as the house value increases, so do your repayments.

The final, and perhaps simplest, first-time buyer incentive is the deposit scheme. These are sometimes advertised by developers as “Move-in for £99” schemes – where the developer will pay your five per cent deposit, stamp duty and legal fees. Sometimes these schemes go even further, with some housing companies giving away £1000 cashback and furnishing the property with £5000 worth of goods. Some new-builds targeted specifically at first-time buyers come with everything from fridges and cookers, to linen and cheese-graters! The total value of all these goods is on average £11,500, so it is well worth looking into – and you don’t have to worry about finding extra money to furnish your new home!

Existing Homeowners
Incentives are not just for first-time buyers – there are plenty around for those of you who are looking to sell as well as buy. Again, most of these come from new-build property developers, but they often have great benefits to the seller and can really take the hassle out of moving house.

The main incentive for house sellers is the 100 per cent part exchange. Under this scheme, the new-build developer will buy your old house, freeing you to move into your new home quickly and without the hassle of selling yourself. This eliminates the stresses that come with a property chain, and completely cuts out the need for an estate agent – which means you pay no agency fees. Remember that because the developer will want to sell your old house quickly, you will typically be offered ten per cent less than the asking price – but weigh this up against a chain-free move and no agency fees and you will usually come out of it better off.

To qualify for the part exchange scheme, your new house must be more valuable than your old one – usually worth between 25 and 30 per cent more.

There are many similar incentives on offer. Under the chain-breaker scheme, the housing company will buy a lower value property further down your property chain – enabling the rest of the chain to move fast, and your sale to complete. Other housing companies will employ agents to take over the selling process on your behalf while you move into you new house, with no fees involved.

From the sublime to the ridiculous
There are some home-buyer incentives which just border on the ridiculous – and these are not just limited to new-build developments. With houses on the property market moving very slowly, some private sellers are throwing in extras to sway buyers into paying the full asking price – and fast!

The list of incentives which private sellers are offering ranges from £20,000 sports cars to four-week holidays – with sellers offering buyers use of their own holiday homes, provided they pay for their flights. In a case recently, one seller was offering a place for one child at the prestigious prep school round the corner from the house – the school was fully subscribed until 2011, and needless to say, the house sold within the week!

Other incentives include commuter train tickets for the year – which can cost upwards of £10,000, and special, bespoke incentives based on the location of the house itself. For example, a flat above a nightclub in London recently sold with a fully paid annual membership to the club below. The former flat of a Jeans designer in London even came with the offer of cost-price women’s Jeans for the duration that the buyer lived there!

New-build developers have been offering prospective buyers free products for years – white goods, carpets, curtains, but recently their incentive packages have changed somewhat. The latest family incentive packages include offering buyers a £19,000 BMW, gym memberships for the family, or a package of four plasma screen TV’s!

If you are thinking of enticing buyers to your property, do remember to be careful! Don’t get carried away, and end up parting with something worth a small fortune – or promise something you can’t deliver on.

If you're thinking of improving your home prior to selling it or have decided to stay put and spend the legal and stamp duty fees etc on improving your home, then don't forget to try and get more than one quote (preferably three) for comparison. You can get free, no obligation, online quotes for all your home improvements - from double glazing to driveways, loft conversions to solar panels at Home Improvement Quotes .co.uk - click here to try it now.