Barratt shelves apartments as lenders prefer houses

Barratt Developments is to focus on building houses rather than apartments, in response to lenders’ preferences.

The group’s chief executive, Mark Clare, says the company will build what it knows it can sell and in the case of apartments, lenders are making life difficult for mortgage borrowers by asking for deposits of 25%.

The oversupply of new-build apartments in the UK’s city centres has been causing problem for banks and building societies since the onset of the credit crisis, with evidence that some properties were deliberately overvalued in large-scale mortgage scams.

Buy-to-let investors in particular were encouraged into the market and since the property market downturn, some apartments have lost 50% of their value.

According to Mr Clare, the problems do not extend to Barratt’s apartment developments in Milton Keynes, Leeds and Birmingham, all of which are reporting sales.

The company has also revealed that overall, its private reservation rates per site have been running 34% ahead of last year.

Furthermore, cancellations were down to 13% for the period 1st July to 8th November 2009, compared with 23.7% in the same period of 2008.

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