‘A developer gave us a £16,500 deposit’: The new-build perks and if they’re worth it

When Tesco manager Walter Kadramer and his wife Ciena, a receptionist, started thinking about buying their first home in west London, they couldn’t imagine how they would be able to afford somewhere worth £330,000. But that’s exactly what they’ve done. Developer Fairview Homes offered a perk which added 50 per cent of whatever deposit they were able to put down through its “top-up incentive”. Shorts The couple, both in their thirties, put down £33,000 towards the flat, with Fairview adding £16,500 – taking their deposit to £49,500. That meant their loan to value – the amount they would own versus borrow – was 85 per cent, unlocking cheaper mortgage deals. They ended up getting a 4 per cent interest rate on their mortgage, taking their monthly repayments to £1,400 – considerably cheaper than the £1,575 they had been spending on rent for their one-bed flat in Hounslow, west London. “It took a lot of commitment and there was no secret trick,” Walter said. “We decided not to ask family or friends for help. We wanted to do this ourselves, with our own hard-earned money, and the top-up was a huge bonus,” he added. Having worked at Tesco for nearly five years following a career in hospitality, Walter believes his experience demonstrates what is possible with careful planning and taking advantage of the right help. “There’s this idea that people like us can’t buy,” he adds. “But if you plan, save, and stay focused, it can happen. It’s not easy, but it’s possible.” Walter and Ciena are among thousands of buyers taking advantage of sweeteners to get on to the property ladder, with increasing numbers of housebuilders offering free cash and perks to tempt prospective customers. Around 76 per cent of new four-bedroom homes were offering some kind of promotion to buyers, according to research by e.surv last year – up from 48.5 per cent in 2021 – along with 60.6 per cent of three-bed homes, up from 41 per cent. According to e.surv’s research, the most common perks currently being offered by property firms are cash for deposits, money towards interior or appliance upgrades, and cash for stamp duty payments. A common approach is to top up buyers’ deposits – often by 5 per cent – so if you can put down 10 per cent, the builder will add 5 per cent, taking your deposit to 15 per cent, for example. But the offers are getting increasingly unusual and creative. At the Kantha Quarter development in Poplar, London, first-time buyers are currently being offered £300 per month towards their rent while their new home is under construction and until legal completion. Developers are also offering extras like gym discounts, furniture bundles, or specific gadgets. Redmile, a property developer, is handing buyers two one-year memberships to local gyms at some of its new-build estates, alongside paying up to £2,000 in legal fees and £2,000 in estate fees. And this week, it was revealed that developer Berkeley Group was offering to pay for up to two years of fees at St John’s Preparatory and Senior School if families bought one of its homes at Trent Park in Enfield, north London. The fees cost up to £20,880 a year for children aged 11 and over, meaning parents could save over £41,000 on school costs. Why are builders offering sweeteners? Industry experts say property firms are increasingly using these promotions to attract demand without having to reduce their headline asking prices, which protects the overall valuations of their developments. They have traditionally got around reducing prices by offering cash incentives, allowing buyers to access the property at the headline price but effectively paying less out of pocket. However, property gurus note the expanding range of freebies suggests buyers are being more cautious with spending, forcing developers to entice those sitting on the fence. Tracey Dixon, mortgage specialist at Pure Mortgage and Protection, said buyers have more choice now than several years ago and are therefore taking longer to commit, so developers “know they need to offer something extra to stand out”. “Rather than cutting headline prices and risking values across the development, builders are becoming far more creative with incentives to help buyers make the numbers work,” she said. “These incentives tell us demand is still there, but affordability is dictating how homes are being sold.” Anthony McQuilliam, director of Bolt Mortgages, added: “We’re seeing a growing shift towards more creative incentives because buyers remain cautious and are scrutinising every cost. “Higher mortgage rates over the past few years have changed purchasing behaviour, even for wealthier buyers, so developers are having to work harder to convert interest into reservations. “Incentives are increasingly being tailored to specific buyer groups, too, whether that’s stamp duty contributions, mortgage support, or education costs. This suggests we’re currently in a market where buyers have greater negotiating power than in stronger years.” The hidden catch for buyers However, consumer experts warn buyers not to be entirely blinded by freebies. New-build properties often come with a “new-build premium”, meaning the headline asking price can be notably higher than similar, older properties in the exact same postcode. High-street mortgage lenders are also cautious about developer sweeteners. Most banks will strictly cap financial incentives at 5 per cent of the property’s overall purchase price. If a developer offers perks worth more than 5 per cent, lenders may reduce the amount they are willing to let you borrow to protect themselves against negative equity. Stephen Perkins, managing director of Yellow Brick Mortgages, said: “Developer incentives aren’t automatically a red flag, but they should prompt buyers to ask more questions. “If a builder is willing to contribute towards stamp duty, mortgage payments or furniture, it’s worth understanding whether you’re receiving genuine added value or simply paying for those incentives through a higher purchase price. “Lenders and surveyors also look closely at incentives because they can affect the property’s true value.”