Put your buyers' deposits to work on site
You have sold off-plan and the deposits are sitting in a client account. A deposit release bond lets you use them on the build, with every buyer still protected.
Why developers use them
Development cashflow
Deposits arrive as sales exchange, which is exactly when build costs are rising. Once the bond is in place they can be in your bank account within a week.
Less reliance on expensive money
Premiums typically work out at around 4-6% a year, against 12-20% for mezzanine finance, so released deposits can cut how much mezzanine a scheme needs.
Keeps the senior facility intact
The bond sits alongside your senior debt, and we check early whether your facility agreement needs the lender's consent.
Reassurance for buyers
Purchasers receive a certificate showing their deposit is covered by a bond from a specialist insurer, which is a clear message at the point of sale.
Two ways in
At the start
The best time. With the bond arranged before sales launch, the sale contracts can provide for release from the outset and deposits can be released as buyers exchange, subject to the agreed terms.
Part way through
If the scheme has run short of cash, a bond can still be arranged on a live development. The existing sale contracts need to allow release, so we look at what has already been agreed and what would need to change.
Schemes of every size
There is no minimum. Deposit release has been used on schemes from a single high-value home sold off-plan to developments of around 200 units. Houses, apartments, mixed-use with a residential element and conversions can all be considered.
What the underwriter looks at
- Financial strength - net assets and recent accounts matter most
- Track record - first schemes are considered, but carry more weight on the balance sheet and security
- The scheme itself - planning, programme, costs and sales
- New-home warranty or structural cover from a reputable provider
- Security - a personal guarantee is normal and a counter-indemnity is often preferred
Using the money
Released deposits must be spent on the development they came from. They cannot be used to fund other schemes or taken out of the business.
Every case is underwritten on its own facts. Nothing on this page is an offer of cover or advice on whether a bond is right for your scheme.