According to one of the largest homebuilders in the UK, mortgage lenders are showing caution and imposing stricter terms on homebuyers who choose apartments over houses.

A developments group said that the difficulties in securing mortgages on apartments were making sales difficult and causing the company to build less of such developments.

As a result this has forced them to reduce the number of new apartments it is building because banks and building societies are not willing to lend against them.

Chief Executive Mark Clare, said: "We need to build what we know we can sell." Clare reported that buyers would have to pay a much larger deposit on flats as opposed to houses – 25% as opposed to 10%.

He said there was ‘absolutely no issue" with demand for living in apartments – citing schemes in Milton Keynes, Leeds and Birmingham, where apartments are selling at a rate of four or five a week. However, others report many unsold flats and rental voids.

A number of new apartment blocks have also been the focus of large scale fraud, which has stung half a dozen mortgage lenders to the tune of millions of pounds over the last two years, further turning them off such properties.

A spokesman for the Council of Mortgage Lenders stated: "We are in a market where lenders are risk averse and we have seen an oversupply of apartments. A larger deposit means the lender and borrower are protected."