Barratt guarantee to defer deposits
Oct 2 2007 by Chris Knox, The Journal
HOUSEBUILDER Barratt Developments has signed an agreement that will let house-hunters put off paying for a deposit until their new property is fully built.
The Newcastle-based company has signed up to the Zurich Property Deposit Guarantee scheme, which is the result of an agreement between Zurich Bank and property experts the XBond Company, and defers the cash deposit by securing a short-term guarantee for Barratt on behalf of the buyer.
The cost of deferment over one year is 4.99% of the deposit, with the buyer able to stretch to a longer period subject to approval. A Barratt spokesman said: “We believe this will make the house buying process simpler and easier.”
The company has disputed suggestions the move could prove a risky strategy following figures that revealed that its sales of new homes dropped by up to 10% in the week after the Northern Rock drama began.
It also denied that signing up to a deposit guarantee scheme was a direct reaction to a slow down in the housing market, but said that it was part of its ongoing strategy to make new-build properties available to a wider market.
Patrick Law, director of corporate affairs at Barratt, said: “A lot of people have asked why we are undertaking such a risky strategy at a time of great upheaval in the credit markets. The state of the markets have no bearing on whether we receive deposits or not. We will be carrying out exactly the same checks on customers who defer a deposit and ensuring they can meet their obligations when the property is built.”
While Zurich carry out all the necessary credit checks, XBond works with buyers to make sure the process of deferral is quick end easy.
Paul Gratton, executive chairman of The XBond Company, said: “XBond was set up to provide innovative financial solutions to assist buyers and owners of property. The team at XBond wanted to find a way to improve the process for buying property in the UK at a time when speeding up the house buying process and increasing the availability and affordability of new homes has become a political issue.
“We are delighted to have secured not only an exclusive arrangement with Zurich, but also with Barratt Developments. In a world that is increasingly wireless and cashless, the Zurich Property Deposit Guarantee is a simpler, faster and more affordable way for people to guarantee a deposit on a property.”
Barratt last week posted underlying full-year profits up by 16% to £454m.
