A HOUSEBUILDER has launched an innovative deal to stimulate sales of new homes – by promising to cover any losses from a subsequent sale.
In an effort to boost confidence – and drum up business – Aberdeen-based Stewart Milne, one of Scotland's largest private housing developers, has pledged to make good any losses on homes that buyers put up for sale in the three to six years after the
y buy them.
Stewart Milne, the founder and chairman of the Stewart Milne Group said: "We have a strong belief in our product and these initiatives demonstrate our confidence in the longer-term view of the sector."
There is currently no consensus among mortgages lenders or house sellers on how long the housing market will be in the doldrums nor when the market is likely to recover, although most agree current woes causing a shortage of mortgages will last well into 2010.
The board at Stewart Milne is betting the market will inevitably recover because of a shortage of new homes.
Mr Milne argues not enough homes have been built to meet demand for the last five to ten years, and this will become worse as house builders slash projects this year and next.
He explained: "There has got to be pressure in an upward direction on prices once we start moving through the current cycle.
"That is what gives us the confidence to come up with guaranteed value on properties (customers] are buying now."
Milne is not the only house-builder attempting to lure customers with the offer of loss-protection.
Barratt, which reported a 68 per cent fall in profits yesterday, also announced a scheme protecting buyers from house price falls of up to 15 per cent during the next three years on homes sold before Christmas.
Ed Stansfield, head of property research at the consultancy Capital Economics said the housebuilder's scheme might boost some sales in the short term.
He said: "If they are truly unlimited guarantees the buyer is protected on the downside. It also looks like a more attractive proposition for a lender as well.
"The biggest issue here is a shortage of funding. It seems unlikely over a short period of time the banks will adjust their policies simply because you are buying a Stewart Milne or a Barratt home."
Mr Stansfield added that the housing market was unlikely to recover within three years.
"If anyone were to buy, it is most likely they will be looking at a house that is worth less in three years' time."
Yesterday, Stewart Milne revealed a 40 per cent fall in pre-tax profits in the year to June, down to £25 million.
The group sold about 1,000 homes during the year, down 25 per cent on its estimates.
FACTBOXAS house sales across the UK plummet, several housebuilders have revealed incentives to lure potential buyers back to the market.
Cala Homes is offering a 5.8 per cent fixed-rate mortgage, while others such as Mactaggart & Mickel, Gladedale and Miller Homes offer interest free loans on 20 to 25 per cent of the value of new homes, limited to either new buyers or certain schemes.
Others such as Persimmon Homes and Muir Homes are offering cash-back schemes, stamp duty payments, kitchen upgrades and even golf club memberships, while Bryant Homes is offering to cover the cost of stamp duty.
John Postlethwaite of Punter Southall Financial Management said: "Any incentives are welcome but the major issue is still can you get a mortgage?"
