Hi everyone

I am still in the throws of researching my first investment and am currently contemplating Ostrava, Bratislava and the UK. I had originally opted to stay away from the UK market but a deal has recently attracted my attention (although am treading very carefully!).

My question is: for those who invest in UK property for BTL purposes, have you ever taken up one of those deals where the development has been valued at higher than the sale price, but on completion, you're awarded cashback from the developer? For example, the deal is this: valued at £125K (lowest of 3 valuations), purchase at £110,000 and then 30% cash back of purchase price.

It just seems a bit too good to be true IMHO - even in light of the market, as it essentially means getting more money back than you're initially putting in.

Thanks

Louise

Just another thought - I guess it's not strictly "your" cash back, as the mortgage would still be £110,000 less any deposit, so is it true to say the 30% is more like a loan?

Isn't it illegal?
Seem to remember a programme about the higher (and false) price being recorded in the Land Registry, allowing the developer to artificially inflate the prices of adjacent properties by saying "look in the Land Registry to see what the one next door sold for".

Not exactly illegal, but let's say it's not exactly legal either. In fact, the Council of Mortgage Lenders is already on the case of this type of arrangement. Come October, they will be outlawed in the CML's handbook of rules that lenders must follow. Such arrangements are frowned upon and they will, consequently, all but have gone before the end of the year (in the UK anyway).

The CML is also making reference in its guide for lenders to incentive schemes, so discounts and other incentives will be clearly identifiable and quantifiable, sep from the actual structural (bricks and mortar) element of the loan.

Tony B