Lombard’s Property Development Guarantees9th Nov 2020
Lombard Insurance Company Limited are leaders in specialist risk insurance providing world class trade and commercial insurance solutions. We have 30 years’ experience in developing and delivering guarantees across the construction, logistics, fuel, mining and energy industries, as well as insurance solutions in trade credit, and through our partner underwriting managers.
With our expertise in insurance guarantees we know the importance of being able to structure the solution to best fit the needs of the client and the beneficiary within the nuances of a specific industry and type of risk.
We are always open to new opportunities and look at markets where we can offer something different from what’s always been done, and in doing so, make a positive difference. One of Lombard’s latest ventures is into the world of property and the establishment of our Property Development Guarantee.
Financiers need to have qualified and complete sales before development funds are released to the developer. Residential developers need to secure the required number of approved sales to release project financing so they can start building.
New residential developments can take 2 years to complete. Traditional bank solutions for buyers, in the form of a bond, rely on a buyer’s income.
Some buyers don’t have a current income to qualify for the required bond, and don’t want to liquidate assets (sell their house or shares) 2 years ahead of when they actually need the cash.
Qualified buyers but no qualified sales mean no new development. Lombard’s Property Development Guarantee solves this problem by providing guarantees to qualifying buyers – assessing their assets rather than their income.
“Using our guarantee product means a buyer doesn’t have to sell off their assets until closer to the transfer of their new home – and the developer gets to count the transaction under the guarantee as a qualifying sale to help meet the financier’s quota” says Sarah Wright from Lombard.
If, for some reason, the buyer is left in a position where they are unable to pay the full purchase price on transfer, the developer will cancel the purchase agreement with the buyer and submit a claim to Lombard.
Sarah Wright | firstname.lastname@example.org | 011 551 0690