Housebuilder Barratt Developments has announced a deal with its lenders to strengthen finances after it confirmed it is to cut 1,200 jobs.

The group, which warned last week that about 1,000 jobs were under threat, added to recent bad news from rivals Redrow, Persimmon and Bovis Homes as it said average private sales were down 43% year-on-year in the past six months.

Barratt said it had struck a "prudent" deal to extend the repayment of £400 million of debt and had renegotiated its banking agreements in a move seen as giving the group vital breathing space.

Shares in Barratt opened 25% higher on news of the refinancing deal.

Barratt also offered hope that there was still buyer demand for property, albeit restricted by an "acute" shortage of mortgage finance.

The group said visitor numbers in the past six months had risen 15% on the previous half-year, although still down 14.8% year-on-year.

Forward sales were down by half as of July 1, at £700 million against £1.41 billion last year, while prices of private property sales reduced by 5% in the year to June 30 on an underlying basis, according to the group.

Barratt is cutting 18% of its 6,700 workforce and shutting offices in Chester and Sheffield to save costs in the face of falling sales and property prices.

It is also merging a further eight divisions into four under plans to cut annual costs by about £40 million, half of which should be saved this financial year.

Mark Clare, group chief executive, said: "By enhancing our sales capability, reducing our costs, and agreeing a new financial package, we have now substantially improved our competitive position and are better placed to deal with what will be a very challenging period ahead."

Barratt said it would take an £85 million hit on writing-down the value of land in the year to the end of June, with a further £30 million wiped off land from recent acquisition Wilson Bowden.

That deal - bought at the top of the market last year - has seen Barratt burdened with £1.66 billion of debt.

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