Barratt Developments takes a leaf out of car salesman's handbook

Published 11th Sep 2008

Barratt Developments, the country's largest housebuilder, has turned to the car industry in search of the kind of incentives that will help it to swim against the tide of a tumbling housing market.

Faced by an economic climate that it described as the most difficult it had experienced, Barratt is offering the sort of price promise more usually seen in vehicle showrooms - it will refund any losses on a new Barratt home bought between now and Christmas if the buyer sells at a loss in the next three years.

Barratt also said that it would pay stamp duty on purchases up to £500,000 - saving buyers up to £15,000 - and would offer part-exchange to buyers struggling to sell their existing home.

The Government has scrapped stamp duty on deals worth £125,000 to £175,000, but last week's move is expected to help only first-time buyers in certain parts of the country.

Mark Clare, Barratt's chief executive, said: “Our customers are looking for greater certainty over moving costs and the price of their purchase. People like part-exchange and they say they want some protection from the uncertainties of the current market.”

Mr Clare said that he hoped that the combination of the Government's plans and Barratt's own incentives would stimulate additional demand through the important autumn selling season.

He called on the Government to extend the Special Liquidity Scheme to ensure that lenders did not suffer any further tightening of their ability to issue mortgages.

Mortgage rates have started to inch down in recent weeks after a fall in wholesale funding costs. Nationwide Building Society, the Co-operative Bank and Yorkshire Building Society cut their rates for five-year fixed-rate loans yesterday.

However, analysts fear that ending the liquidity scheme as planned could end the improvements to mortgage availability, while Barratt said that there were no signs that mortgage financing was getting any easier for potential buyers.

Forward sales at Barratt fell by 37 per cent in the full year to June 30 and have continued to fall in the current year, down by 30 per cent in the past four weeks.

Mr Clare said: “We are focusing on running the company through one of the most difficult markets we have ever seen and we make no assumption that it will get easier over the next 12 months.”

Barratt forecasts that house prices will fall by 15 per cent from the peak of the market during 2009. However, this is more optimistic than many estimates. Nationwide, the country's largest building society, said last week that it expected prices to fall by 25 per cent. According to the Halifax, house prices have already fallen by 12.5 per cent this year.

Mr Clare said that Barratt had done well to complete 18,588 houses, an 8.3 per cent increase on last year. The average selling price for the company has also risen 6 per cent. However, margins fell from 15.5 per cent last year to 15.1 per cent in the year to June and look likely to fall further this year.

Source: ' times '

View All Latest News