Barratt Developments, one of the UK's biggest housebuilders, has signed up to a new scheme which will allow borrowers to defer stumping up cash for a deposit when they buy a new-build property.
The move, which will potentially make it easier for homeowners to buy a new-build home, comes amid fears of a slowing housing market due to the fall out from the Northern Rock crisis. Barratt said last week its sales had fallen in midSeptember as consumers became more cautious.
The scheme, launched by Swiss insurance giant Zurich, is aimed at customers who want to delay paying a cash deposit - which on a new-build home can easily be more than £20,000 - until their property has been built. It allows homeowners to buy a property deposit guarantee for a fee. Housebuilders accept the guarantee secured by Zurich in place of a cash deposit.
This helps customers who may not be able to afford the entire deposit immediately or who do not wish to tie their cash up for several months.
Typically buyers of new-build homes must pay a cash deposit of at least 5 per cent of the value immediately - even though the property may not be built for six to nine months.
Building times can take even longer overseas. Those buying abroad in countries such as Spain may have to put down a 30 per cent deposit immediately even though their property may not be completed for up to two years.
So far Barratt, which builds 21,000 homes a year, is the only housebuilder to offer the new guarantee. Negotiations are under way with other developers, representing a third of the UK new homes market.
Clive Fenton, executive director of Barratt south region, said: "We believe this will make the house-buying process simpler and easier."
The scheme is being run by Zurich and the XBond company, a business chaired by Paul Gratton, a former chief executive of internet bank, Egg.
The XBond company and Zurich carry out credit checks on borrowers before they take the guarantee to ensure they will be able to fund the deposit when the property is built. Customers must pay a fee, typically 4.99 per cent of the deposit needed.
Mr Gratton described the scheme as a form of bridging finance to help borrowers buying new build properties.
