Telephone:
07772-345032
Email:
dominic.sears@suttongate.com
Next Generation Development Finance
October 6, 2020
A unique offering which guarantees sales for developers and their lenders
"The guarantee removes pricing and demand risk, opening up access to finance on improved terms and
with increased leverage. As part of our guarantee, we will pay over a 10% cash deposit which can be
released to the developer pre-construction. These funds can have a transformative effect on viability,
reducing equity requirements and boosting developer returns.
For development finance lenders and brokers our sales guarantee removes all speculative risk
completely changing the credit profile. This in turn allows more business to be written, at greater ease
and with increased certainty of outcome due to the sales guarantee.
“Everything should be made as simple as possible, but not simpler”
This quote is attributed to many great thinkers, notably Einstein, whilst there may be debate around
who said it there is no debate around the statement itself. We understand that development and
financing is already a complex area with many moving parts and a range of uncertainties. Our sales
guarantee cuts through many of these simplifying the process for all involved.
So how does it work?
1. An interested party – typically a developer, lender or finance broker – will generate an instant
underwrite through our online engine. This proposal will detail the sales guarantee as well as
demonstrating expected improvements in returns and reductions in equity input.
2. A surveyor will engage with the developer, their lenders and advisors to review the full
details and instruct lawyers.
3. Exchange contracts pre-construction guaranteeing to acquire all units on a site at a set
price. We will pay over 10% of the contract price as a deposit which can be released to the
developer or their lenders for their use.
4. The developer will commence construction and open market sales. For each unit sold on the
open market a small underwrite fee will be taken for providing the sales guarantee.
5. If there are unsold units at the end of the development cycle, or at any point in the process, the
developer or lender can call upon to complete.
DEVELOPERS
We generally work with SME developers across England & Wales, from start-up developers
establishing themselves in the market to more experienced regional housebuilders and construction
companies.
All of our clients are developing schemes or phases of 15-60 units with a typical GDV of £3,000,000 –
£20,000,000.
The Benefits of Next Generation Development Finance to Developers
• Typical benefits enjoyed on a £10,000,000 GDV scheme using our sales guarantee versus
speculative approach:
o 78% reduction in upfront developer cash contribution
o 186% increase in developer returns on cash invested
o 10% deposit released to developer on exchange
o 91% Loan To Cost
• Improved viability allows for stronger offers on new sites without losing margin
• Guaranteed sales, pricing and exit
• Develop more stock and more sites
• Quicker, cheaper and easier financing with a sales guarantee
• Access our wide network of trusted specialists and preferential terms (lenders, brokers,
specialist lawyers, tax advisors, warranty providers, planners, construction companies)
• Access new development opportunities via the network
• Reduce/remove personal liabilities
• The 10% deposit plugs your equity shortfall
• Complete visibility and control over sales and outcomes
• Reduce cash requirement
• The use of sales guarantee allows developers additional leverage so larger or multiple sites can
be targeted
• Quick and simple to get a sales guarantee proposal"
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