Buyer-funded development
Buyer-funded development, also known as investor-led fractional sales, is a model of financing property development that typically involves using deposits from individual buyers to fund apartment buildings. Buyers of the apartments purchase off-plan, paying deposits of up to 80%.
This model of financing has become more common since the 2008 financial crisis as it has been harder for developers to fund schemes through traditional borrowing from banks or institutional lenders. It differs from more conventional models of off-plan development where buyers’ deposits (usually 10%) are held in secure escrow accounts and released only on project completion.
It has been subject to wide criticism as a risky form of investment, with the Solicitors’ Regulation Authority warning that buyers may be ‘unwittingly financing high-risk or fraudulent property development’. Since the large deposit is paid up-front, it can be spent on project costs and fees before any construction work actually begins, and when construction does begin it can be without the commitment of funding necessary to enable it to be completed. There is also no safety net if the developer becomes insolvent, funds run out, or if the developer fails to deliver the project as proposed.
[edit] Related articles on Designing Buildings Wiki
Featured articles
Check out some of the best features and news from Designing Buildings as well as key stories from around the web.
Where its at podcast (and video) - The role of the Architectural Technologist as an Expert Witness.
More than 200 remarkable buildings added to SAVE’s Buildings at Risk register.
Government scraps pre-application consultation for Nationally Significant Infrastructure Projects.
Historic England and infrastructure
New projects offer opportunities for the historic environment and local communities.
Construction Management, 2 July
Construction deaths halve in two years.
Green Book changes to drive investment in all parts of UK.
Minimum energy efficiency standards (MEES)
CIAT briefing on response to consultations for privately rented non-domestic properties.
Connect, collaborate, shape the future
Registration now live for UK Construction Week Birmingham.
CIOB announces Saul Humphrey FCIOB as new President for 26/27 term.
A quick, simple, and zero-bills solution to prevent overheating.
The adaptive reuse of large industrial structures.
Promoting the circular economy by extending the life of buildings.
CIAT responds to Climate Change Committee report
An urgent wake-up call for both government and the built environment.