I have always taken pride in the ability of GPS to quickly adapt to changed market conditions, provide commercial outcomes and to treat borrowers as clients.
COVID-19 related issues in the residential construction industry have again put us to the test. Project Trust Accounts, particularly regarding retentions, has not assisted.
The fundamental issue has been the escalation in build prices and uncertainties in the supply of building materials and contractors.
While the traditional model has been for there to be a fixed price building contract, I have seen builders shy away and not be willing to accept all the risk for a tight margin. When you factor in the new retention requirements, I can understand why builders are not happy campers.
GPS has now spoken with several builders, developers, and lawyers to understand the issues and work up how we can be part of the solution.
As expected, there is no silver bullet solution. Each project has its own factors. We have added to, and further developed several of our lending features to enable us to add more value to you. I look at it as adding more tools to the GPS toolbox.
New features include:
- An expansion of the permitted use of our Project Reserve to allow for the payment of deposits which reduces delays and allows your project to be completed sooner; and
- A revision of our Multipartite Deed* to support the need for more flexible payments to builders.
We also have many existing features that are worth pointing out when discussing why GPS is a great funding option in the current market:
- Our consistent funding source from loyal investors means that we can pay builders within 2 days and the money is always there when you need it; and
- We don’t require pre-sales, which means in this market of increasing interest rates and builder collapses creating bank uncertainty – we will be here to assist.
Developers, if your Bank has progressed from being difficult to now being obstreperous on builder requirements, and it is prejudicing your relationship with your builder, then please give GPS a call to discuss what we can do for you.
Builders, we are happy to discuss with you what GPS can do to take some of the tension out of your relationships with developers if we fund the project. An example is that GPS has a proven track record of paying progress draws within 2 business days of certification.
We want to be part of the solution, so let us help.
*References to Multipartite Deed also refers to Tripartite and Financiers Development Deed.
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