A former partner of Levy Real Estate has set new bond-providing company which he believes could revolutionise the home-buying market.
Simon Heilpern, a West End investment agent who retired from Levy earlier this month, has launched Deposit Doctor, a firm he said had “huge potential” for the residential property industry.
The company, which is backed by New Zealand-based CBL Insurance, provides bonds to vendors that in effect guarantees that it will pay the deposit of a buyer.
Heilpern said the product allowed buyers extra time to gather a deposit between exchange and completion.
For residential developers
and housebuilders, the scheme is promoted as an incentive service in sales packages, in particular for off-plan sales than can take months to complete.
“This is a piece of the finance puzzle that nobody has looked at before. The bond is seen as a bank note, but from us. It is the property deposit cure,” said Heilpern.
“Business is changing at an increasing rate and it is important to be forward looking and to have a product that is easy to apply and swift to enact.
“We want to be the default way which people buy property in the UK and we would be happy to cover 5% of the UK market in the next 12 months,” he added.
Deposit Doctor, to which the potential buyer pays a 3.5% fee, is also in discussions with the government about incorporating the business model into the sale of affordable and public sector-backed homes.
CBL Insurance already runs a similar scheme in New Zealand and Australia.
How the Deposit Doctor works
- Prospective buyers enter their details on the Deposit Doctor website, and provide proof of a mortgage offer.
- A Deposit Doctor bond is then issued for the deposit, for a 3.5% fee, which acts as a substitute for a cash deposit of up to 20%, or £2m, of the sale price.
- The buyer signs an indemnity in favour of the insurer allowing it to sue for the full amount plus costs.
- At completion the buyer pays the full purchase price including the deposit.
- If they fail to complete as per the contract, the seller is protected by the insurer.
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