In short
- An incentive is not the same as a price cut: a lower price also lowers your mortgage, your stamp duty and your loan-to-value.
- Every incentive must be declared to your lender on the UK Finance Disclosure Form, and some lenders reduce what they lend because of it.
- Under the New Homes Quality Code, a builder cannot pressure you with an incentive that needs an immediate decision.
- Get every incentive written into the reservation agreement before you pay the fee.
What builder incentives are
An incentive is anything a builder offers on top of the home itself to help you buy. An incentive can help with cash, or make it easier to move, without changing the advertised price.
On NewHomeSearch, we show incentives as the builder states them. Right now, 11,453 homes for sale have a builder-stated incentive, and 869 have had a price cut. The new-build incentives page shows where builders are cutting prices and which offers are worth having.
The common incentives
| Incentive | What the builder offers | What to check |
|---|---|---|
| Deposit contribution | Pays part of your deposit | How your lender treats it, and whether it is capped |
| Stamp duty paid | Pays some or all of your stamp duty, LBTT or LTT | Whether it is a fixed sum or the full bill, and when it is paid |
| Legal fees paid | Pays your solicitor's fees, sometimes only with a named firm | Whether you can use your own solicitor and still get it |
| Mortgage subsidy or rate reducer | Contributes to lower your mortgage rate or payments | How long it lasts and what happens after |
| Cashback | A cash sum on completion | Whether your lender accepts it at all |
| Part exchange | Buys your current home | The price offered against the market value |
| Assisted move | Pays your estate agent fees or helps sell your home | The agent, the asking price and who sets it |
| Upgrades and extras | Flooring, a better kitchen, appliances, turf | The value, and whether it is your choice of items |
| Furniture or white goods | Items outside the standard specification | Whether you want them, and their real value |
Deposit contributions
The builder pays part of your deposit. That reduces the cash you need, but many lenders treat it as a reduction in the price when they work out how much to lend. So a deposit contribution may not let you borrow more, and on some homes, particularly flats, a lender may decline it or limit it.
Stamp duty paid
The builder pays all or part of your stamp duty, LBTT or LTT. The tax is still worked out on the full contract price, and you still pay it on completion through your solicitor; the builder's contribution covers some or all of the bill. For a first-time buyer in England and Northern Ireland on a home up to £300,000, there is no stamp duty to pay, so this offer may be worth nothing to you. See the stamp duty guide.
Mortgage subsidies and rate reducers
The builder contributes money to lower your mortgage rate for a period. This can cut your monthly payments early on, but check what happens when the period ends. The Own New Rate Reducer is one scheme built around this idea.
Part exchange and assisted move
With part exchange, the builder buys your current home, so you avoid a chain. With an assisted move, the builder helps you sell your home on the open market, often paying the estate agent. The part exchange guide covers both in detail.
Upgrades, extras and furniture
These are easy to value at the builder's price, but the real question is what they are worth to you. A better kitchen you would have chosen anyway is worth more than a furniture pack you would replace. Ask for the list of items and the value the builder puts on each, so you can compare them with buying the same things yourself after you move in. If an upgrade would have to be ordered before exchange, check what happens to it if you cancel.
How lenders treat incentives
For every newly built home not yet occupied, the builder completes the UK Finance Disclosure Form. It lists the value of every incentive: deposit paid, mortgage subsidies, stamp duty paid, cashback, legal and valuer fees, non-cash items such as appliances and furniture, part exchange terms, and help with moving and selling costs. The lender's valuer sees it, and your solicitor checks it with you.
Each lender decides how to treat what is on the form. Depending on the lender and the home, it may:
- Accept the incentive in full.
- Accept incentives only up to a limit, often set as a share of the price.
- Take the incentive off the price before working out the loan-to-value.
- Decline certain incentives, such as cashback, on certain homes.
The new-build mortgages guide explains loan-to-value and valuations.
A price cut or an incentive?
When a builder offers an incentive, it is often worth asking whether you can have a price reduction instead. A lower price changes everything that is worked out from the price:
- Your mortgage is smaller, or your deposit is a bigger share.
- Your stamp duty may be lower.
- The valuation is more likely to match the price.
- The price recorded for the home reflects what was really paid.
An example
Say a builder offers a £300,000 home with a £10,000 deposit contribution, or the same home for £290,000. For a home mover in England, stamp duty on £300,000 is £5,000, and on £290,000 it is £4,500. With the price cut, a 10% deposit is £29,000 rather than £30,000, and you borrow £261,000 rather than £270,000. With the contribution, a lender that takes it off the price bases its lending on £290,000 too. You borrow the same £261,000 and put in the same £29,000 of your own money, but you pay stamp duty on the higher price.
This is an illustration. Which is better for you depends on your cash, your lender and how much you value lower monthly payments now. The cash you need calculator works out the deposit, stamp duty and fees on a real home less the builder-stated incentive, as an illustration, not advice. The new-build premium tool compares the price with similar local resales.
Your protections under the New Homes Quality Code
Builders registered with the New Homes Quality Board must follow the New Homes Quality Code. On incentives, the Code says:
- Builders must not use high-pressure selling, including offering a financial incentive in return for an immediate decision to reserve or buy.
- At time-bound events such as launch weekends, customers who attend must be given seven days to decide, though the home could still be sold to someone else in that time.
- Builders cannot offer incentives when recommending a professional adviser, and must tell you in writing about any fee they receive for introducing one.
- Builders must not offer an incentive to persuade you to complete on a home that is not finished.
If you think a builder has broken the Code, see the guide to the New Homes Quality Code and the Ombudsman.
Get it in writing
Write every incentive into the reservation agreement, with:
- What it is, described exactly. Not just "upgrades", but which items.
- Its value in pounds.
- Any conditions, such as using a named solicitor or completing by a date.
- When and how it is paid. For example, whether a stamp duty contribution is taken off the money you send at completion.
- What happens if completion is delayed. Does the offer still stand?
Then make sure your solicitor and mortgage adviser have a copy, and that it matches the Disclosure Form. A verbal promise from the sales office is hard to rely on later.
Questions to ask the sales office
- Is this incentive instead of a price reduction, and can I have the reduction instead?
- Is the incentive a fixed sum, or does it depend on the final price?
- Do I have to use a recommended solicitor or adviser to get it?
- Does the offer still apply if the build is delayed?
- Can I choose the upgrades, and what is each one worth?
- Has this plot had a price change, and what was the original price?
- When does the offer end, and can I have that in writing?
The guide to viewing a new build has more questions to take to the show home.
Where to find incentives now
The new-build incentives page shows where builders are cutting prices and the offers worth having. You can also search new homes by place and see each home's builder-stated offers beside its price, or browse by builder. Incentives change often, so check the offer on the day you reserve and get it in writing.
Before you accept any incentive, value it in cash, check how your lender treats it, and compare it with a lower price.
Questions people ask
Are new-build incentives worth it?
They can be, but an incentive is not the same as a price cut. A lower price also lowers your mortgage, your stamp duty and your loan-to-value, so compare both before you choose.
Do lenders accept builder incentives?
Lenders see every incentive on the UK Finance Disclosure Form and decide how to treat each one. Some accept them up to a limit, some take them off the price, and some decline certain kinds.
Can I ask for a discount instead of an incentive?
Yes, you can ask. A builder does not have to agree, but a price reduction is often worth more to you than an incentive of the same face value.
Does the builder paying stamp duty reduce the tax?
No. The tax is still worked out on the contract price, and the builder pays some or all of the bill. First-time buyers below the relief threshold may have no stamp duty to pay, so the offer may be worth nothing to them.
Can a builder say an offer ends today?
Under the New Homes Quality Code, builders must not offer a financial incentive in return for an immediate decision. At launch events, buyers must be given seven days to decide.
Do I have to use the builder's solicitor to get an incentive?
Builders cannot offer incentives when recommending a professional adviser under the New Homes Quality Code, and you are always free to choose your own.
Sources
- UK Finance: Disclosure Form (version 1)ukfinance.org.uk
- UK Finance: Disclosure Form background and frequently asked questionsukfinance.org.uk
- NHQB: New Homes Quality Code Part 1, selling a new homenhqb.org.uk
- NHQB: New Homes Quality Code Part 2, legal documents and completionnhqb.org.uk
- GOV.UK: Stamp Duty Land Tax: residential property ratesgov.uk
A guide, not advice. NewHomeSearch is independent: it does not sell homes, arrange mortgages or take payment from builders. Rules change, so the stamp duty figures and live counts here come from the dated tables and today's listings. Take independent legal and financial advice before you commit.