Fri 13 Jun 2008
Some housebuilder incentives are ‘important’
The news that housebuilders will soon be required to disclose buyers’ incentives to enable lenders to offer mortgages that reflect the true value of a property has been met with a mixed response from property expert Kate Faulkner. The Council of Mortgage Lenders will introduce the new measure on 1 September in an attempt to help sustain confidence in the new-build property market.
"The new measures will provide additional security and safeguards for borrowers, as well as lenders," says Michael Coogan, the CML's director general.
Faulkner agrees that the CML should clampdown on housebuilder incentives such as ‘no money down’ deals and ‘discounts’ by way of cash-back and the inclusion of free goods, such as a car or kitchen. However, she fears that getting rid of genuine marketing tools used by developers to ‘close’ a sale to get rid of buyers objections and allow them to proceed, such as paying their stamp duty and part exchange, could be ‘quite devastating’ depending on what has to be disclosed.
Faulkner told Show House online: “It’s a fair critique to give the information on incentives that can be accused of ‘over valuing the property’. But for genuine marketing tools such as stamp duty and part exchange offers, these are real methods to allow people to move and ‘dropping’ the price lower wouldn’t enable these people to move, so it’s perfectly OK. I think if this was disclosed and indeed the sale price that appears on the land registry is net of the latter two incentives this would cause a massive problem in the market as now sold data is available it can be seen by the buyer and would make a nonsense of new build property price values.”
Posted by Marc Da-Silva
in Council of Mortgage Lenders, Kate Faulkner, Michael Coogan, News on Fri 13 Jun 2008
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