Loss of Deposit Bonds
Sell more units off-plan, borrow less money
Historically, property developers have struggled to convince purchasers (or their solicitors) to buy off-plan. Their primary concern is the prospect of losing their deposit should the developer become insolvent. Most developers will require a 30% deposit but can currently only offer 10% loss of deposit cover.
This is no longer a problem as we can source a stand-alone financial bond that allows the developer to insure these deposits up to a maximum of 30%.
Loss of Deposit Bonds Product Features
- Facility up to £300m GDV
- Guarantee that deposit will be returned to the investor in the case of administration of the developer
- Cover available up to 30% of the GDV
Loss of Deposit Bonds Benefits
Allows the developer to release and reinvest off plan deposits
Provides security for the private purchaser and their solicitor
Helps sell off-plan units faster
Funds guaranteed by the insurer
More cost effective than borrowing from a financial institution
Cashflow for the developer
Loss of Deposit cover Case Study
- A project of 100 units in central London with a GDV of £200m (approx. £2m each) needed a Loss of Deposit Cover
- It was anticipated that 50% (50 units) would sell off-plan generating deposits of £10m (at an average of 10%)
- The developer was able to use the funds for construction purposes and by providing LOD Cover to the purchaser, it gave assurance that if the developer ceased to trade, the purchasers would be refunded their deposits
- If the developer had gone to a bank to borrow the £10m it would have cost at least 6%
- By using Loss of Deposit cover it cost only 3%, generating a saving of £200,000
About London Belgravia Brokers
Loss of deposit bonds are a complex product that need to be packaged professionally and presented to underwriters in a knowledgeable format.
We are specialist brokers for latent defects insurance and real estate surety products. We have access to providers that can assist in unique circumstances and can look to create products specifically for our client’s needs. We have built up unique relationships with underwriters that allow us across to unique markets ensuring our clients our clients the best levels of service.