Barratt Developments has criticised lenders for their stringent mortgage criteria on new-build homes, claiming they are disadvantaging house builders by limiting the maximum LTV they will lend on new-build.
In its annual results for the year ended June 30, Barratt says the restricted availability of mortgage finance is a key reason for low housing demand, which has weakened its financial performance over the past year.
It says mortgage finance is particularly restricted in the new-build market, which is dominated by a small number of lenders that typically offer a maximum LTV of 80% on new-build homes compared with 90% on older properties.
Mark Clare, group chief executive of Barratt, says: “There does not appear to be any justification for this differential and it disadvantages house builders and their customers. This discrepancy is a driver of lower demand for new homes.”
In May the Council of Mortgage Lenders confirmed it was in talks with builders to discuss increasing maximum LTVs from lenders for new-build properties.
But a spokesman for the CML says: “We are in discussions with our members on a variety of issues. It is up to individual lenders to determine their lending criteria.”
Barratt’s results reveal it made a pre-tax loss of £11.5m for the year, compared to losses of £162.9m in 2010.