LDS and Assetz Capital launch end-to-end development finance package

  • 21/06/2022
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LDS and Assetz Capital launch end-to-end development finance package
Property lender Assetz Capital and sales guarantee firm LDS Sales Guarantees have teamed up to provide a finance package for small and medium enterprise (SME) housebuilders.

The package combines a development loan with LDS’ sales guarantee which is an initiative to purchase any unsold units on a site and release its 10 per cent deposit to developers. 

Purchasing unsold units is expected to remove risk from the asset and allow lenders to increase leverage. The deposit, which is released to developers, aims to enable them to spread their equity further and build more homes. The deposit is issued as an unsecured loan with zero coupon, which means no interest is payable until the loan matures. 

The package is designed to let developers obtain funding for up to 95 per cent of project costs as well as a guarantee that any unsold homes will be purchased. 

Developers of housing or suburban apartment schemes across England and Wales with gross development values (GDV) of between £1.5m and £35m can apply for a funding package of up to 75 per cent of GDV or 95 per cent of project costs. 

Rates on Assetz’s development loans start from 7.4 per cent and terms are available up to 36 months. 

Ben Jenkinson, regional director of LDS Sales Guarantees, said: “We are excited to launch this alliance today which combines LDS Sales Guarantees and loans to provide a higher geared finance package with a guaranteed exit.  

“The product will unlock the delivery of hundreds of new homes across England and Wales and we are pleased to be working with Assetz, a quality lender who shares our passion for supporting SME housebuilders.”  

Stuart Law, chief executive of Assetz Capital, added: “Historically SMEs have been essential to meeting our national housebuilding targets, but the sector has declined in recent decades because of significant economic challenges and a lack of financial support from traditional sources of capital, like high street institutions or the public sector.  

“Today, we are seeing demand for new homes hitting historic levels, while supply continues to lag a long way behind, driving up prices. It is essential for consumers and our housing market that we revitalise SME housebuilding through innovative finance solutions that provide sufficient working capital and de-risk the development process, giving companies confidence to progress with greater certainty of a return on their investment.” 

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