There’s clearly a big problem in the housing market, not enough homes are being built and the market relies on larger developers. Smaller developers must be part of the solution providing variety and quality.
SOLUTION
The Sales Guarantee Scheme supports SME developers to build more homes in a new and improved way. The sales Guarantee Scheme removes sales risk and therefore provides confidence to build. A payment of 10% of total cost is provided up front to increase the developers financial capacity to build.
HOW IT WORKS
A Preconstruction purchase contract for any completed and unsold homes on site is entered into with the developer, with an agreed sales price of 80% of GDV is agreed. This removes the lack of sales risk.
the guarantee also releases 10% interest free deposit. This removes the amount of equity a developer must put in.
Homes are then built and marketed as usual.
However, if any homes can’t be sold or refinanced the Sales Guarantee Scheme can then be used to complete the purchase, allowing developers to repay their development loan and focus on new projects.
There is no obligation to sell to the Guarantee provider, homes are usually sold on the open market with the proceeds used to repay the 10% cash deposit and the Sales Guarantee fee.
For more information contact me.
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