It offers lenders, brokers and developers access to instant sales guarantees — where it acquires all unsold units at an agreed price — and underwrites sites in order to transform their viability, remove risks, and help deliver new housing.
It aims to ensure an exit for both housebuilders and lenders, remove speculative risks and two barriers to development funding: pricing and demand.
As a result, LDS looks to open up previously unworkable scenarios and allow for quicker pricing and processing of development finance for all parties.
Lenders, development finance brokers and housebuilders can generate a sales guarantee in two minutes after inputting details of the development into the LDS online engine, which is set to then form the cornerstone of the funding package offered to developers by lenders.
The company claimed that a typical scheme using an LDS sales guarantee would see a 77% reduction in cash contributions from SME developers, and a 170% increase in return on investment.
Once contracts have exchanged, LDS pays developers a 10% upfront deposit, which can be released to assist with cashflow, such as for site purchase or working capital.
LDS believes that this could increase a developer’s ability to look at larger sites using the same capital and bringing forward additional housing.
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Mark Hawthorn, CEO at Landmark Group (pictured above), said: “It is accepted that the revival of the SME housebuilding market is crucial if we are to construct anything like 300,000 new homes a year in England.
“SME developers typically bring forward smaller brownfield and infill sites — these have potential for hundreds of thousands of new homes across the country, but developers are often stymied by access to finance.
“The LDS online engine is the start of a never-ending process of innovation and advancement we want to bring to the sector.
“The overarching aim is simply to improve every possible element of the process to ensure developers and lenders can [deliver] more new housing and reduce what has been in my lifetime a perpetual shortage.”
Mark Goldberg, commercial CEO at Together, added: “We have known the wider Landmark Group for many years, so we’re one of the first development finance lenders to be involved with sales guarantees.
“It’s a brilliant product for lenders, developers and finance brokers to consider when structuring finance packages.”
He noted that the LDS sales guarantee offered additional comfort, and that it was “the right product [in the] right place and time for the market”.
Jason Caprioli, lending director at Kingswood Associates, commented: “LDS sales guarantees enhance the return on equity for a developer, as well as the number of projects they can undertake concurrently [and], at the same time, decreases lender sales risk — something that’s on everyone’s mind in a post-Covid and Brexit environment.
“The ability for interested parties to produce online proposals are second to none, combined with [LDS’s] in-house expert teams to produce quick, efficient and smart money for the SME housebuilder.”
Paul Mathison, CEO at the Create Group, stated that the proptech product had the potential to “revolutionise” development financing, particularly for SME housebuilders.
He added that the online sales guarantee could become “a vital first port of call for the SME market”.
LDS is targeting to help double the number of homes built by SME housebuilders in Britain within the next five years, equating to over 25,000 additional houses each year, worth approximately £8bn-10bn of new development.
The sales guarantee online proptech engine has brought forward £23m of new housing development from SME developers in the first three weeks of 2021.