Property developers in the UK with an off-plan sales strategy are being faced with an ever-hardening insurance market. One of their greatest challenges is securing deposit release cover alongside their latent defect policy. LBB is bridges this critical gap with a surety product that protects 100% of the purchaser’s deposit and allows the developer to use the sales proceeds towards the cost of construction.
Deposit Release Bonds (DRBs) can provide a developer with a low-interest source of working capital. It is most suitable for developers who are paying a perceived higher rate of interest for their senior debt or wish to ‘top-up’ their funding without having to enter the mezzanine and junior debt markets.
Once a developer has acquired a deposit release bond, they can then deliver the bond to the appropriate obligee (purchaser) to protect their interests in the project. A DRB enables the developer to use the funds in escrow for the project’s remaining construction costs, as opposed to obtaining additional capital from traditional funding lines – which will result in a substantial saving for the developer.
Key product features:
- Funds guaranteed by the surety provider
- Facility up to £150m GDV
- Cover available up to 10% of GDV
- Provides security for the private purchaser and their solicitor
- Helps sell off-plan units faster
LBB
0203 701 0422
