LDS has provided a Sales Guarantee to a new site in Kings Lynn.
EAM Developments had contracted on a site purchase then suffered a valuation issue leaving a funding gap. Their finance broker approached us on Tuesday and by Friday we were ready to contract, releasing our 10% deposit to close the shortfall and protect their purchase.
Construction starts on Norfolk homes after LDS Sales Guarantees unlocks £230,000 funding in three days
Construction is underway on new homes in Norfolk, after a new Sales Guarantee enabled an SME housebuilder to overcome a financial viability issue and begin work on the site.
Suffolk-based SME housebuilder EAM Developments had contracted to purchase the former Clover Social Club site in Wretton, Kings Lynn, but was left with a funding gap due to an unexpected valuation issue.
This put EAM Developments at risk of not being able to build the new homes and losing the £40,000 site deposit and other associated fees.
The company’s development finance broker, Westbourne CF, approached LDS to see if a Sales Guarantee could overcome the hurdles.
LDS Sales Guarantees underwrite the financing of development sites for SMEs, guaranteeing that housebuilders can call on LDS to complete on any unsold homes.
LDS also release a 10%, unsecured cash deposit to developers on completion of contracts. This removes the major barriers of pricing and demand risk from development finance transactions, completely transforming the financial viability sites.
After being approached by the broker, LDS was ready to contract and release a 10% cash deposit to EAM Developments three days later. The unsecured, interest free amount of £233,600 closed the shortfall on the site and protected EAM Developments’ purchase. This allowed the housebuilder to complete the purchase without losing the deposit and fees.
Work has now begun on the construction of the eight new build homes on the site of the former Clover Social Club, transforming a once derelict site into much-needed, quality local homes.
“We are so happy to be able to crack on and build these much-needed new homes. I learnt about LDS from my broker and quickly saw the benefits, the ability to use their 10% deposit and removal of sales risk brought to the transaction. They were ready to complete within days of instruction after receipt of valuation and I was extremely impressed with their flexibility and professionalism in the way they moved towards exchange of contracts so quickly. The release of deposit allowed me to move forward on a development I may not have been able to without the use of their deposit monies.”
“Mark and the LDS team not only provided an extremely good product that allowed a complicated and difficult transaction to complete but were also flexible in adapting their approach to accommodate a number of what seemed insurmountable last-minute hurdles. The product is exactly what the market needed and the understanding and creativity that Mark and the LDS team bring to a deal is invaluable. Without LDS eight households would miss out on the opportunity to live in these much-needed new homes.”
“We knew from first contact this site had to be processed as quick as possible. We prioritised resources internally, moving immediately to investment committee and sign off within 24 hours. Lawyers were in funds ready to contract on the Sales Guarantee within three days of first contact.
“We know that financial viability is one of the key hurdles for SME housebuilders, and our Sales Guarantees and the additional 10% cash deposit are intended to help overcome that. Development finance is a complex area, and we aim to simplify that for all involved whilst being flexible and fast in our approach to enable SMEs to boost output.
“Financial viability is one of the key reasons that Britain has seen the number of homes built by SME house builders fall so sharply. SME housebuilders like EAM Developments have historically been responsible for around 39% of housing supply in Britain but this has fallen to just 10% by 2020.
“We believe it is vitally important to support SMEs to help build the new homes that Britain needs.”
If you have a site you are involved with or would simply like to know more, please contact Mark Roberts via email or call him on 07590 434266. You can also use our Online Sales Guarantee Engine which produces proposals in just two minutes.
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