A senior financier has lost a deposit of £500,000 after having to walk away from a deal to buy a £3.25m north London property because of the credit crunch.

He had exchanged contracts earlier this year to secure the house, but could not complete the purchase after he and his wife failed to receive expected pay bonuses. They also saw the value of their stock options fall by 70%.

In a separate deal in Chelsea, west London, a buyer is said to have forfeited a £1m deposit when he failed to complete the acquisition of a £12.75m, seven-bedroom home.

“Six months ago this would have been unheard of,” said Richard Gutteridge, partner at the agent Knight Frank, which specialises in prime properties in London.

“With the market downturn, deals have fallen through more and more. If someone’s lost their job, or their situation has changed, people have to take a bitter decision on whether they should go ahead with the process.”

The banker who has forfeited £500,000 is a managing director of a City investment firm. He said this weekend: “There is no way I can complete the transaction. I did not realise the market would collapse when I made the exchange.”

His wife worked at the same bank but has lost her job, and the couple, who declined to be named, face being sued for the cost of remarketing the house.

Pulling out of completion after exchange is a breach of contract. If the seller loses money because the property value falls before another buyer can be found, they may be able to sue the original buyer.

The banker’s lawyer, Simon Thomas, a senior partner at Thomas Legal Group, said: “They are resigned to losing the £500,000 but the seller wants to pursue them for every penny they’re got.

“If it gets to court, the buyer hasn’t got a particularly strong case.”

Martin Bikhit, director of Kay & Co, the central London property agent, was not surprised. “Given the state of the market, this is increasingly likely to happen, so we now advise clients to ask for a higher deposit,” he said.

Figures released last week from the Ministry of Justice and Council of Mortgage Lenders showed a sharp rise in homebuyers struggling to repay loans.

According to the ministry, lenders issued 29,516 possession orders in the third quarter of this year – an increase of 24% over the same period last year. Arrears among buy-to-let borrowers are also rising.