Blend Network has launched a new development finance product with a built-in sales guarantee.
Development Plus Powered by LDS Sales Guarantees allows developers to finance more schemes by increasing their loan-to-gross development value (GDV) by over 75 per cent, and typically cutting their cash contribution by up to 77 per cent.
Blend Network said the product is for developers who need easy access to stretched senior debt and will offer a loan-to-cost figure of 95 per cent.
LDS offers a guarantee to acquire any unsold units on a site, allowing lenders to increase their leverage whilst reducing risk, and the firm can also release their 10 per cent cash deposit to developers unsecured.
The peer-to-peer property lending platform said the additional leverage, coupled with the LDS deposit release, enables developers to increase development capacity by three to four times and to often benefit from a 170 per cent increase in returns on cash invested.
“We are very excited to launch Development Plus powered by LDS – the first-ever development finance product to incorporate a built-in sales guarantee,” said Yann Murciano, chief executive at Blend Network.
“This new breed of financial product is a very compelling proposition for developers, brokers and lenders alike that allows each party to maximise opportunity and profit.
“By guaranteeing the developer’s exit, it allows us as lenders to push our gearing and borrowers to reduce their upfront cash contribution and increase returns on cash invested.”
“Whilst we work with lenders on a daily basis, Development Plus is our first formal collaboration,” said Mark Hawthorn, chief executive at LDS.
“The sales guarantee completely transforms the risk profile for lenders so it’s natural that we start to create joint products.
“This makes the whole finance process quicker and easier for lenders, brokers and developers allowing for increased numbers of new homes to be brought forward.
“We have issued almost £1.3bn of guarantees so far this year, which is encouraging yet only the tip of the iceberg.”
Read more: Blend Network updates product prices