First Direct changed its developer incentive reporting requirements on 30 September 2026. For a purchase involving part-exchange of the buyer’s existing property, the financial incentive reporting threshold is now 3% of the purchase price. Where there is no part-exchange, the threshold remains 5%.
The change appears in First Direct’s England and Wales Part 2 answer to question 6.4.4a of the UK Finance Mortgage Lenders’ Handbook. It matters particularly on new-build files where the developer is buying the client’s existing home and offering an additional financial incentive.
When must financial incentives be reported to First Direct?
The revised answer distinguishes between purchases with and without part-exchange:
| Purchase arrangement | Financial incentive threshold | Reporting requirement |
|---|---|---|
| Developer takes the buyer’s existing property in part-exchange | 3% of the purchase price | Report cash incentives exceeding 3%, with a copy of the Disclosure of Incentives Form. |
| No part-exchange | 5% of the purchase price | Report cash incentives exceeding 5%, with a copy of the Disclosure of Incentives Form. |
For example, on a £400,000 purchase involving part-exchange, the 3% threshold is £12,000. Without part-exchange, the 5% threshold is £20,000. Incentives exceeding the applicable figure must be reported under this provision.
A reporting threshold is not a guarantee of mortgage approval. Check the mortgage offer, special conditions and any separate instructions, as well as the Handbook answer. An incentive falling within the threshold does not remove another applicable reporting obligation.
What changed for part-exchange purchases?
Before 30 September 2026, First Direct expressly required part-exchange arrangements to be reported and stated that no further financial incentives would be permitted alongside them. Its revised wording introduces a 3% financial incentive reporting threshold for purchases involving part-exchange.
Part-exchange itself is no longer expressly listed as a reportable event in the revised answer. This supports the interpretation that it does not, by itself, trigger reporting under question 6.4.4a. However, conveyancers must still check the full transaction and any case-specific instructions. Seek clarification before proceeding if the arrangement leaves uncertainty about the lender’s requirements.
This is why a checklist copied from an earlier file can give the wrong answer. Our earlier article on changes to lender instructions and conveyancing complexity explains the wider problem: requirements can change between transactions, and superseded wording can matter when reviewing an older file.
Which non-financial incentives still need reporting?
The distinction between fixed or fitted incentives and other non-financial incentives remains important.
First Direct’s answer identifies fixed or fitted benefits that do not need reporting under this provision, regardless of value. Examples include upgraded kitchens or bathrooms, carpets and curtains, white goods, electrical upgrades, turf and landscaping.
Non-financial incentives that are not fixed or fitted must be reported, with a copy of the Disclosure of Incentives Form. The lender’s stated example is a new car.
Do not assume that every benefit described by a developer as an “incentive” receives the same treatment. Establish what is being provided and check its treatment against the lender’s actual wording.
The Disclosure of Incentives Form is still required
The percentage thresholds concern reporting to the lender. They do not dispense with the requirement to obtain the completed UK Finance Disclosure of Incentives Form.
Obtain the form from the seller or developer through the conveyancing process and check it against the contract and incentive arrangements. UK Finance explains that the form records information about incentives, tenure and construction for newly built, converted or renovated property.
For properties covered by Part 1 clause 6.4.1, clause 6.4.2 prevents submission of the Certificate of Title without obtaining the form. Keep the completed form and the record of any lender report or response on the file. Obtaining a completed form should not be confused with completing it yourself.
Check files already in progress
A file opened before 30 September 2026 may have been assessed against the previous answer. Review the applicable instructions before submitting the Certificate of Title, particularly where part-exchange and financial incentives appear together.
If First Direct has already given a case-specific response, consider it alongside the revised wording. Do not assume that a general Handbook amendment overrides an individual condition or retrospectively approves an arrangement.
Our historical post on lenders updating their Handbook instructions illustrates why firms need a process for identifying changes during a transaction.
Keep track of lender instruction changes
LENDERmonitor notifications help conveyancers identify changes to lender requirements and review their effect on current files.
What did First Direct require on an earlier transaction?
The revised answer also illustrates why today’s Handbook is an unreliable substitute for historical instructions. When reviewing an earlier part-exchange purchase, establish the wording applicable at the relevant time and consider it alongside the mortgage offer, incentive form, correspondence and any lender authority.
The First Direct page in the Lexsure Lender Archive provides access to historical Part 2 records, with coverage beginning in October 2021. The full lender record can be requested for a selected historical date.
Reviewing a past First Direct purchase?
Check the historical lender wording for the relevant date before assessing whether an incentive or part-exchange arrangement should have been reported.
Check the First Direct conveyancing panel
For a current purchase, confirm that the particular office handling the transaction can act for First Direct. Our 2016 article on First Direct panel access for CLC firms records an earlier development; its historical transaction limits should not be treated as current panel criteria.
Buying with a First Direct mortgage?
Use the postcode search to find firms listed for First Direct, then ask the chosen office to confirm its current panel status. The directory is a selection of firms, rather than the lender’s complete panel.
Source: First Direct’s England and Wales Part 2 answer to question 6.4.4a, amended 30 September 2026, and Part 1 clauses 6.4.1–6.4.4, as recorded in the source material for this article. See the UK Finance Mortgage Lenders’ Handbook for current instructions and UK Finance’s Disclosure Form guidance. Always check the live answer and the instructions applicable to the particular transaction.