- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 28 Mar 2018
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.
 Find out more
 Related articles on Designing Buildings Wiki
Featured articles and news
England’s railway heritage from the air. Book review.
Identifying interim heritage areas for a neighbourhood plan.
Inspecting and reporting on moisture-related problems.
Will Norway build the world's first floating tunnel?
Domestic Retrofit training course.
Preparing to sell a commercial property.
Local Plan Route Mapper and toolkit.
Thermal mass in buildings.
CIAT's AT Academy.
The UK's most dangerous industries to work in.
Achieving an alternative route into the profession.