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Barratt claims low LTV lending is suppressing demand for new homes

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.

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Guide: 10 required letters — what to send, to whom and when?

This guide from Johnson Fleming will take you through the required communication and also give ideas for additional actions that will ensure your auto-enrolment project is a success. The topics in this guide include: the letters you need to send out; what to send and when; the importance of employee engagement; and what to consider as additional communication.

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