Deposit Release Bonds

Deposit Release Bonds

What is an IFS Deposit Release Bond?

An IFS Deposit Release Bond (DR Bond) is a surety solution that allows developers to unlock up to 10 percent of a project’s Gross Development Value (GDV) from escrowed buyer deposits, while giving those buyers full protection in the event of insolvency.

Unlike traditional funding tools, this bond can be secured before a project begins or at any stage during construction, providing unmatched flexibility across the entire project lifecycle. Whether it is early capital to get works underway or additional liquidity to keep a live site moving, the bond adapts to the developer’s timeline.

DR Bonds can also be invaluable to developers looking to increase pre-sales volumes in a way that is it possible using purely traditional financing, by allowing units already in escrow to be sold.

All of our bonds are backed by a robust legal framework and supported by Professional Indemnity cover that exceeds the bond value. This gives comfort not only to the developer but also to solicitors and buyers involved in the transaction. On top of that, our bonds automatically expire upon practical completion or sale with no ongoing obligations, allowing developers to see Return of Investment sooner.

Who are Deposit Release Bonds for?

Developers who are partway through a build and need working capital but cannot access the deposits already secured from buyers. These funds are often locked in escrow and unavailable to support construction costs.

Why a Deposit Release Bond?

Traditional funding options at this stage of a project can be expensive and restrictive. Lenders may charge high interest rates or request equity, which impacts profitability. Selling units off plan is a common way to generate funds, but in the UK, solicitors have become cautious about releasing deposits to developers.

The IFS Deposit Release Bond provides a better solution.

It allows developers to unlock a portion of buyer deposits to help fund completion, while giving buyers legal protection and peace of mind.

Key Benefits

  • Legal clarity, due diligence, and buyer protection
  • Access to capital without giving up equity
  • Lower cost than traditional mid-build finance
  • Backed by Knights, one of the UK’s top surety law firms
  • The DRB can be used to raise funds before or during development
  • Legal PI greater than the bond value
  • Can be used for market purposes and increase pre-sale volume by using the DPB as an extra of deposit protection How They Work

How They Work

  • Developer begins marketing and takes deposits on off plan units
  • Deposits are held in escrow and cannot be used without legal backing
  • Developer decides when they want to release the deposits
  • IFS works with Knights to create a legally recognised bond
  • This bond can be used as marketing for the developers off plan unit sales
  • Once in place, funds are released to the developer
  • The buyer is protected in the event the project is not completed
    • The bond ends once construction is complete and units are sold or occupied
    • The developer can also use the DRB without release the deposits for a greatly reduced rate to increase the pre-sale of units and for their own marketing.

Why Brokers Use Them

  • Simple process with standard bond packaging
  • Helps your clients access funding quicker than traditional finance, we can release a bond within one week*
  • Extremely flexible financing option that can be used during any point of the build
  • Strengthens your value as a broker
  • Competitive cost of capital for brokers customers with no dilution of equity or complex terms
  • No exit or facility fees
  • Competitive commissions compared to traditional funding
  • Can be used as a replacement as for Section 1/A for your client’s warranty, including providing the coveted, and inaccessible greater 10% release.

Scope of Cover and Limits

Covers up to 10% of the project’s GDV.

  • Bonds available on projects of £30 million and above
  • Underwriting depends on the financials of the developer
  • Backed by established surety partners with legal oversight.

Territories

  • UK & Northern Ireland
  • Isle of Man
  • Channel Islands
  • Other Territories will be considered on a case-by-case basis.