Deposit Release cover is a type of surety that allows a property developer to release and utilise any deposits for residential units purchased off plan whilst providing assurance to the purchaser that their deposit is safe.
As a developer of residential stock you need to be sure that you have the right levels of cover in place, this is where we can help by providing a loss of deposit facility.
- Covers loss of deposit for potential purchaser
- Allows developer to release and reinvest any off plan deposits
- More cost effective than borrowing from a financial institution
- Funds guaranteed by A rated insurers
- Placed in the Lloyds Insurance market
- Insurer will pay in the event of default by the developer
- Security for the purchaser
- Cash flow for the developer
- Can be purchased before work has commenced or during build period
- We provide a facility up to an agreed amount that you can draw down as and when required
- Cost varies but are typically 3% pa of the facility plus an arrangement fee.
Example of use
A project of 100 units in central London with a GDV of £200m (approx. £2m each) needs release of deposit cover. It is anticipated that 50% (50 units) will sell off plan generating deposits of £10m (at an average 10%). The developer is able to use the funds for construction purposes and by providing deposit release cover to the purchaser gives assurance that if the developer ceases to trade the purchaser will be refunded their deposit. If the developer had gone to a bank to borrow the £10m it would have cost at least 6%, by using deposit release cover it can cost only 3% generating a saving of £200,000.
Buildsafe’s partner company London Belgravia Brokers specialise in niche insurance products for large scale & prime property developers, in addition to deposit release insurance we can also provide building warranties for high value schemes.
Call us now for further information on 0203 701 0422