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There's a discount if your parents pay for your UK apartment
HOUSING developers have offered free parking spaces. They've said they'll pay buyers' sales taxes. And one UK homebuilder is giving discounts to anyone who gets help from their parents to cobble together a deposit.
Countryside Properties plc is making the offer to people buying an apartment in South Oxhey on the outskirts of Greater London. Such incentives are a sign of how developers are trying to offload stock at a time of falling sales - and how unaffordable Britain's housing market has become to those without family wealth.The offers come as high prices following years of value gains stymie the market.
"New-homes sales have been falling across England and Wales over the past year," said Sue Munden, a senior analyst at Bloomberg Intelligence. "Incentives such as covering stamp duty, partial exchanges or discounts for early sign-ups may be stepped up if sales volumes remain subdued."
Contributions from parents and relatives are having a huge impact on the UK housing market, particularly in the capital, where it now costs the average Londoner a record 14.5 times their annual salary to purchase a home, according to researcher Hometrack.
Over a quarter of housing transactions across Britain are expected to be reliant on the Bank of Mom and Dad this year, with an average contribution of £18,000 (S$32,260) and total lending of £5.7 billion, data from Legal & General Group plc show.
Only one London borough didn't see a drop in sales in February compared with a year earlier, according to the Office for National Statistics.
Still, there may be reasons to be optimistic that incentive offers and help from family members may be contributing to a turnaround.
"May has shown a considerable increase in sales agreed, mainly due to vendors taking advice to quote realistic prices that have attracted buyers," Allan Fuller, who runs his own estate agents in Putney, southwest London, said in response to a survey by the Royal Institution of Chartered Surveyors. "Flats are selling well to young buyers with help from the bank of Mom and Dad."
Countryside started offering incentives to customers receiving family help in 2012, and the programme now accounts for 35 per cent of sales to first-time buyers at South Oxhey - a short 40-minute train journey from central London.
The homebuilder invited potential buyers and their parents to attend a "Bank of Mom and Dad event" this June, where they got to see a show home and a scale model of the development. Hundreds have used the scheme in 2018, the company said.
"It catches the attention, creates interest and stimulates conversation," according to Countryside Sales Director Andrew Loveday. "It's all about helping first-time buyers to get on the ladder, and parents, relatives are very often involved in that."
One-bed apartments are available for £270,000, much lower than the £425,045 average for an apartment in London itself.
If a buyer gets help from family or friends for 5 per cent of the value of the home, Countryside will hand them a cheque for £2,000 upon completion. The money for the deposit must be a gift rather than a loan.
The offer is reminiscent of the government's Help to Buy programme, which gives interest-free loans to buyers of new homes priced at £600,000 or less. This has been criticised for pushing up prices and helping homebuilders as much as buyers.
These incentives aren't without risk. If banks insist on the parents' names featuring on the title deeds, they could then find themselves liable for taxes on second-home ownership, according to tax and advisory practice Blick Rothenberg. BLOOMBERG