From free white goods to competitive mortgages: How developers are attracting first-time buyers

One irony of the current housing market hiatus is that while there are apparently too few new homes being built to house Britain's growing population, developers themselves are unable to sell all of those that are actually completed.

So on the one hand, there were fewer homes built in the UK in 2009 than in any peacetime year since 1924, and the social housing waiting list almost doubled to 1.8 million families during the 1997-2010 Labour government. Yet most housebuilders across the country are now cutting prices and offering incentives to woo reluctant buyers.

The reason for this contradiction is, of course, the difficulty in obtaining mortgages for any property in today's recessionary climate. For brand new buyers the problem is exacerbated because new-builds typically have high asking prices and some valuers, acting for mortgage lenders, say they are worth less than their price tags. But if you are in a position to buy and in the mood to haggle, this is undoubtedly a time to bag a bargain.

The marketing website Smartnewhomes.com says there are 11 different kinds of incentive now being offered. These include the well-known – part-exchanging your old home to accelerate a deal, or free fixtures and fittings – to the less expected, such as reductions for armed forces personnel, cash help with moving costs or stamp duty and, at Taylor Wimpey's Academy Central development in Barking, east London, a free plasma television with every home purchase.

Developers love playing with numbers and it is crucial that you get some evidence that the "special offers" really are just that.

For example, Linden Homes has offers at some sites that require buyers to pay only a 5 per cent deposit and provide a mortgage for just 75 per cent of the asking price – the rest is paid as a three-year interest-free loan by the developer. So someone buying a Linden two-bed property at Northfields in Colchester, Essex, would have to find £127,497 up front instead of the £169,995 asking price. The rest would be payable later under the terms of the developer's loan (Gallifordtryhomes.co.uk).

This is a valuable incentive as it may allow some people to buy because they require a smaller-than-expected mortgage. But strictly speaking it is not a price reduction.

A more obvious special offer comes from developer Urban Solutions. It pays stamp duty on one-bedroom apartments at its Seren Park scheme in Greenwich, south east London; this is worth £8,000. The builder is also knocking £25,000 off each of its two-bedroom apartments at the same scheme (Serenpark-greenwich.co.uk). Similarly, the developer Telford Homes has knocked a modest £20,000 off the price of its two-bedroom flats at the Kinetica scheme in Hackney, north-east London – they still cost a hefty £440,000 each although the firm is throwing in a parking space, too, which is worth another £20,000 (Kineticaapartments.com).

Crest Nicholson, one of Britain's largest builders, takes a different approach. Some homes at its development in Epsom, Surrey, come with carpets, blinds, light fittings, snazzy upgraded kitchen worktops and landscaped gardens, apparently worth £18,500. (Crestnicholson.com). The same developer is offering buyers at a scheme in Aylesbury, Buckinghamshire, £500 a month towards their mortgage for six months.

These kinds of incentive are modest but do pull in some extra buyers. Teachers Anthony Wright and Jonathan Hamilton have bought a home at a Barratt scheme at Perry Common in the West Midlands. They were persuaded to do so because of Barratt's Head Start scheme, giving them a 15 per cent loan and thus requiring a smaller mortgage. "We found that we were able to buy a much larger home than we thought we would be able to afford," says Anthony.

At Tipton near Sandwell, West Midlands, Joanne Rotherham and David Brayne bought a show home from David Wilson Homes, which took their old place in part exchange.

This allowed them to move in six weeks – unusually quick in today's stagnant market. Joanne says: "Because we bought the show home it came with most of the furniture, fixtures and fittings and was completely decorated."

Yet the best deals are not those publicised via press releases and brash promotion boards on building sites. For the real bargains, you have to get down and dirty at face-to-face negotiations with sales teams.

"There are key times when developers are under more pressure than usual to secure sales, so that's the time to buy," says Nick Evans of Stacks Property Search, a buying agency monitoring the new-build market. Such times are ends of financial years or quarters, when sales data is sent to boardrooms and investors. In exceptional circumstances, developers will offer as much as 40 per cent off their official asking prices if you are willing to purchase off-plan, well before a development has completed even its first phase; this will give developers vital cash flow at an early stage of a scheme, impressing shareholders and unlocking funds for later phases.

Similarly, if you wait until the very end of a development, when there are only one or two completed homes remaining to be sold, you should get a bargain. Nick Evans says this is when developers try to cut their remaining security and advertising costs, and so will sell a home at well under the asking price if it allows them to vacate the site.

Evans also urges buyers to do their homework so they can calculate exactly what they are paying and what discount they could negotiate.

They should check the price per square foot of a new home and compare it with a similar older property nearby – that way, they see the premium being asked for new-build. It is not unusual for premiums to be 20 per cent, although some developers have cut this because of sluggish sales. Price per square foot is a good starting point for negotiations.

Evans also advises buyers to commission surveys as builders have reduced costs in the downturn and "there's a possibility that they may have cut corners and quality".

Buyers should also measure the rooms of any new property and compare that with their existing furniture, because clever presentation in show homes can make the available space appear deceptively large.

If these tactics make the purchase of a new home appear like a tense poker game, then to some extent it is. After all, the developer wants you to buy at the highest price while you want to pay as little as possible; neither of you wants to blink first.

The key to success is to remember that in today's highly volatile market the developers, for once, have been dealt a bum hand. As the buyer, you hold all the cards.

Meanwhile, in the second-hand market ...

Buyers of new homes may be flooded with freebies but the downturn means sellers of second-hand houses have become more tight-fisted.

"We've seen vendors take Agas, door furniture, light bulbs and loo rolls. Some even siphon oil from the tank, which is a bugbear for buyers moving in during winter," says Mark Lawson of The Buying Solution, part of the Knight Frank estate agency.

So-called "property stripping" has stepped up a gear as house prices have slipped. "You used to see it once or twice a year. Now, about a quarter of homes I sell have items taken, which, frankly, makes sellers look a bit mean. Some dig up plants and even turf," Mark Cartland, an estate agent in Devon, says.

Nowadays, many solicitors and agents acting for buyers draw up lists of fixtures and fittings – sometimes even measuring the oil left in the heating tank – to agree exactly what the buyer will leave behind. "On the day of completion, we check everything is as it should be before authorising the deal," Mark Lawson says.