Lifestyle Brokers Limited - London Property with only 1% down payment!

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London Property with only 1% down payment!

Hong Kong & Singapore based investors can now buy new-build off-plan property in the UK without having to tie up large amounts of their own cash as deposits with developers.

The Xbond www.thexbond.com makes it easier for buyers to purchase a property in the UK (and certain other European countries) where demand for new-build properties has taken off again. Property values have witnessed a marked increase in the UK as the credit crunch peters out; especially since the banks have started to relax their strict lending criteria. Prices in London have risen almost 5% in certain locations over the last three months and National Developers are of the opinion that the ‘Property Deposit Guarantee’ is a breath of fresh air.

The new PDG scheme, which has been set up by some of Europe’s largest Insurers, is aimed at customers who want to delay paying a cash deposit - which on a new-build home can easily be more than £20,000 - until their property has been built. It allows homeowners to buy a property deposit guarantee for a fee (around 1% of the purchase price). Under the scheme's terms, developers accept the guarantee secured by an insurance bond in place of a cash deposit. The scheme has been running in the UK since last year and has now been extended to customers in Asia.

All the leading developers in the UK, including Persimmon Homes, Barratts and Charles Church have signed up to offer the guarantee scheme to their customers and there are about 110,000 new homes in the UK where the guarantee can be used. The scheme helps customers who may not be able to afford the entire deposit immediately, who do not wish to tie their cash up for several months or are maybe even concerned about a developer’s liquidity.

Typically buyers of new-build homes must pay a cash deposit of around 10% of the value immediately - even though the property may not be built for six to nine months.

The guarantee will make it easier for purchasers to turn a wish into a reservation by removing the main barrier to a purchase – a deposit. Instead of having to find the cash for a deposit straight away a guarantee is purchased from an Insurer at a fraction of the deposit sum; the purchaser is then ready for exchange. This allows confident property reservation. It is as good as cash.

What is the Property Deposit Guarantee?

It is a financial guarantee made to the property developer on your behalf. It removes the need for you to pay a large deposit for your yet-to-be-built property. Instead, you simply pay the whole property price when the house is finished and ready to move into.

How much does it cost?

The cost depends on the amount that you need to guarantee and for how long. Based on the length of time between exchange and completion we will work out a guarantee term for you. Guarantees are available in fixed terms of 6 months to 5 years. Please contact us to obtain a quote.

Anything else I need to consider?

Most importantly the guarantee does not replace the need for a deposit; you still have to find the money to complete on your new property when the time comes. If you do not complete you will still owe the insurers for the full amount of the guarantee.

As it costs money to buy the guarantee and you can’t get this money back, you need to be sure that the benefit of holding onto your savings now is not outweighed by this one-off cost. Also, if it takes longer than anticipated to build your new property, you may need to extend your Property Deposit Guarantee. There would be an additional fee for this renewal service.

We’d love to talk to you about utilizing the Property Deposit Guarantee to increase the size of your property portfolio.

Please provide your contact information below, and we'll get in touch

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