LOSS OF DEPOSIT INSURANCE

Deposit Release Cover for Property Developers

Structural Warranties

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How it works

 

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.

In some cases this is provided by the developers warranty Provider (NHBC, Premier Guarantee etc.) however these organisations only cover up to £100,000 per unit or £2m per developer. This means most prime or large scale residential developments are underinsured when it comes to loss of deposit.

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 for where the deposit taken of any given unit is in excess of £100,000 or the development will take deposits in excess of £2m.

The Benefits

  • 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 typically between 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.

  • Developer Details

  • Company Background

  • Project Details

  • Outstanding Loans

  • Project Financing

  • Accepted file types: doc, docx, pdf, xml, xmlx, csv.
  • Previous Developments:

    Development 1

  • Development 2

  • Development 3

  • Controlling function

    Please give the full name of all proprietors, partners and directors and home addresses.
  • Financial Information

    Please provide two years audited accounts demonstrating three years trading. Should you not be able to meet our financial requirements, a deposit, bank guarantee or cross–company guarantee (see below) may be required. If the business is a Limited Company or a Special Purpose Vehicle Company, please provide details of any holding company.
  • Accepted file types: doc, docx, pdf, xml, xmlx, ods, csv.
  • Insurance Details

    Has any director or partner/principal
  • Summary Information

    Summary information i.e description of the project (new build, renovation); current level of reservations; information on the main contractor.
  • Declaration by the Applicant

    I/we declare that to the best of my/our knowledge and belief, the information I/we have given is correct and complete in every detail and I/we have not withheld any material fact. I/We understand that in assessing this application, London Belgravia Brokers Ltd or the Underwriter may search the files of Credit Reference Agencies who will record any credit searches on my file. I/We hereby consent to London Belgravia Brokers Ltd carrying out these searches, as it deems necessary. I/we understand that the signing of this form does not bind us to effecting insurance but agree that should a quotation for cover be accepted, that this proposal and the statements made therein shall form the basis of the contract between me/us and the Underwriter.

Get in Touch

 

London Belgravia Brokers specialise in niche insurance products for property developers. If you would like to discuss our service please contact Giles Fallan, Managing Director, London Belgravia Brokers Ltd +44 (0)203 701 0420 info@lbb.london or via the contact form at the link provided.

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