If you have ever considered buying a new build property, you will no doubt be aware of builders’ sales incentives.These include the offer of free carpets or curtains, cashbacks and “discounted” sale prices.Sounds like a good deal but are these incentives really as attractive as they might seem?
There are stamp duty land tax (SDLT) implications to consider.Just because a price is discounted does not necessarily mean that tax will not be payable on the full, pre-discounted price.The discount would also have to be declared to a mortgage lender before a buyer could proceed due to the lenders’ requirements that the purchase price actually paid must be the same as that notified to the lender at the outset.The banks and building societies also state that any cashbacks offered to a buyer by a developer must be declared before a mortgage is taken out.
A developer might also agree to include carpets and curtains as part of the deal.The value of such items, often referred to as “chattels”, are generally not subject to SDLT. However, non-cash incentives would need to be declared to a mortgage lender.
Builders’ incentives are not to be disregarded and can make the purchase of a newly built home a more attractive and affordable proposition.However, legal advice should be taken at an early a stage as possible to ensure that no unexpected problems or delays arise as a result.