Part exchange, chain breakers, easymovers, mastermovers, deposits paid, mortgage subsidies - the variations on incentives are endless. So what's in it for them? All lead to faster sales: good for the customer and even better for the builder's cash flow and profit margins.
"The same kind of deals just aren't available in the second-hand market," says John Anderson, sales and marketing director of Taywood Homes. Taywood has struck a deal with Midland Bank and is currently offering customers a competitive two-year fixed-rate mortgage of 5.99 per cent with no strings attached. In the last four months 140 purchasers have taken up the offer. All mortgages are subject to status.
Fairview Homes will help to arrange mortgages through selected banks and building societies and these loans can be tied in with paying a purchaser's 5 per cent deposit or a mortgage subsidy of up to pounds 3,000. "If someone's a bit nervous about committing themselves to a mortgage until, say, a car loan has been cleared, we can help with payments for an agreed timescale," says Fairview's managing director Stephen Casey. "It can make the difference between buying a one-bedroom or two-bedroom flat."
First-time buyers have the most choice. "Move in for pounds 99" deals, like those from Barratt and Fairclough Homes, have been created for ex-renters who have the income to pay a mortgage but haven't been able to save a deposit because of high rents. Contracts are exchanged when you move in and you are given up to 20 weeks to save for a 5 per cent deposit. Repayments are made to the developer at an agreed rate until the deposit is accrued and then the sale is completed and mortgage repayments start. The developer shifts his stock units and you get your flat.
New homes used to be like new cars, their depreciation was immediate. But no longer. According to figures from the Halifax, the value of new homes rose 7.7 per cent last year, whereas existing property rose only 4.8 per cent.
But bear in mind that the sample of new homes is very small so the figures can show inconsistencies from year to year. Not much consolation if you bought new around 10 years ago and, having ridden the rollercoaster, are only now seeing your property appreciate. Which leads on to probably the most popular developer incentive - part exchanges, or PXs as they're known in the trade. Read the small print to see if you qualify.
Part exchanges are often available on selected sites only and almost always within a 30-mile radius of the new home. You'll need to be moving upmarket: the value of your present property must not exceed 60-70 per cent of the purchase price (this figure varies between developers).
Barratt arranges for an "independent professional" to value your property after you've paid your reservation fee and claims to make you a "fair" offer in seven days. The company is understandably keen to stress the difference between estate agents' asking prices and actual sale prices - in other words, you are likely to be offered less than you expect.
Berkeley Homes' offer is "a percentage of the average of at least two independent valuations by local estate agents." Fairview asks up to three agents to value your property based on an immediate sale. They are all different ways of saying that you won't be offered the full asking price. Jenny Stevens was offered pounds 30,000 for her one-bedroom flat in south London, for a quick 10-day sale in part-exchange for a brand new two-bedroom house nearby. She declined the offer and sold it with a local agent for pounds 41,000 shortly after.
But developers are one step ahead. Countryside Residential is about to announce a three-tier system to buy one of their homes and is "committed to offering full value part-exchange", probably with extras thrown in if you buy off-plan several months before moving in. If you can't accept the offer made to you, most developers will honour your reservation and let you have a go at selling your house for a better price. If you're unsuccessful, the developer's original offer will still stand, usually up to six weeks prior to the house being completed.
Some offer an agency selling service, saving you fees and the stress of handling the sale. Barratt has its own agency offering, while Redrow Homes is keen to promote its Mastermove scheme, where it instructs an agent to sell your home for a pounds 50 registration fee (refundable if the sale falls through or credited against the price of the new home).
Some developers are operating like mini-estate agents from the site office, from where they mastermind another sales incentive - the chain-breaker. Carole McDowell, a site sales manager with Linden Homes, believes 75 per cent of purchasers are in a chain. She recently had a chain-breaker in place to facilitate the sale of a one-off house selling for pounds 259,000 in Surrey. It involved buying the second house in the four-person chain. At the 11th hour the sale went through without Linden having to buy any property.
Barratt even has a sale and lease back scheme, where you can buy the show house and they will pay you a market rent for it until they have sold all the other properties on the site and you can move in.
Incentives aside, it's good to know that there are still straightforward deals. Maggie Hunt bought the last two-bed flat in a block in Hillingdon, Middlesex, for pounds 61,500 after a "builders' discount" of just over pounds 10,000. A year later, Maggie's more than pleased to find it's now valued at almost pounds 80,000. Now that's what I call a good deal.Reuse content