LDS and Assetz launch end-to-end development finance package to support £1bn SME housebuilder lending boost20th June 2022
The package provides funding of up to 95% of project development costs and a guarantee for the purchase of any unsold completed homes.
Leading property lender, Assetz Capital, and housebuilding Sales Guarantee creator, LDS, have partnered to provide a finance package for SME housebuilders incorporating development loans with a Sales Guarantee.
The package is designed to help support £1bn of lending to SME housebuilders to allow them to play a greater role in solving the nation’s housing shortage.
In 1988, SME housebuilders delivered 39% of all new homes in England. By 2020, this had dropped to just 10% – a drop of 74% – according to the Home Builders Federation.
Assetz Capital, the leading alternative lending platform specialising in funding SME housebuilders, and LDS, creators of the Sales Guarantee, announced today that they will partner to launch an end-to-end finance package for SME housebuilders, combining bespoke development loans with an LDS Sales Guarantee. The package will enable developers to obtain funding for up to 95% of project costs as well as a guarantee from LDS for the purchase of any completed and unsold homes on a site.
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% of GDV or 95% of project costs.
The LDS Sales Guarantee assures demand for completed homes, while also releasing a 10% cash deposit which allows developers to spread their equity further, increasing their capacity to build more new homes.
The option of combining an LDS Sales Guarantee with a development loan expands Assetz’s funding solutions for SME housing developers. Assetz Capital borrower rates on development loans, typically from 7.4%, are amongst the most competitive currently available for this type of finance product, while loan terms of up to 36 months are longer than typically possible in this market.
Developers and finance brokers will also benefit from a quick and efficient approval and contracting process and shared due diligence can provide significant cost savings for developers. In addition, finance brokers will benefit from both loan and sales guarantee procurement fees, and better conversion rates due to the increased funding levels.
The partnership augments Assetz Capital’s position as one of the nation’s leading lenders to SME housebuilders and provides further evidence of the business’s commitment to catalysing growth in the sector, which has declined significantly over the past three decades and continues to face significant economic challenges.
At the start of this year Assetz announced it would increase its lending to the SME housebuilding sector by £1bn, partly facilitated through its extended partnership with Nordic financing provider Aros Kapital. Additionally, the company has set out its ambition to fund a quarter of all SME new builds. Assetz’s institutional and retail investors have over recent years been funding 1 in 12 new homes built by SMEs.
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, CEO of Assetz Capital, commented: “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. This is an exciting partnership which provides further evidence of our commitment to supporting SME housebuilding in the UK in collaboration with like-minded partners.”
Story also covered within Property Week, Development Finance Today, Peer2Peer Finance News, The Business Desk , Bdaily News, Bridging Loan Directory, Housing Today , Mortgage Solutions, Insider Media, Property EU and Business Money.