Affirmative will consider ‘deferred consideration’ for land and development purchases

Deferred consideration is an option that allows a developer to pay for the land at a later date. It could be the solution you need to unlock a difficult property purchase.

The developer can approach the seller and ask if they would defer payment of the purchase price (obviously not everyone will be willing to do this). This could be either deferring all the purchase price until the site is finished or paying part of the purchase price on completion and deferring the balance of the purchase price to a later point in time. Affirmative can be flexible with this and structure it to suit both the seller and developer.

If the seller agrees, Affirmative will have the first charge on the land and the current owner (seller) will become second charge holder to retain an interest in the land. Affirmative will then use the development value of the site as security to lend the funds to the developer. Once the development is complete, it is sold or refinanced to repay Affirmative’s loan and to pay the deferred consideration to the seller.

Example Transaction

Loan application received for £1.5m.

£900,000 was to purchase the site which had planning for 6 houses.

£900,000 was required to build the 6 houses (£150,000 build cost each with expected sale prices of £400,000 per house (a GDV totalling, £2,400,000)).

A good profit to be made if the financing package could be structured.

Affirmative’s Solution

We asked the developer who he was buying the land from. It was someone he had bought four other sites from so he knew him fairly well.

We suggested deferred consideration and he thought the seller might accept.

They agreed that instead of taking £900,000 up front, the seller would accept £950,000 (together with 10% of the net profit) in 12 month’s time.

We then had a £900,000 asset to use as security to lend the developer the required funds.


A great deal for everyone. The seller gets an extra £50,000 plus 10% of the net profit. He has to wait 12 months but he had owned the land for years so he was happy to wait. The developer is only borrowing a net £900,000 (in stages) instead of £1,800,000 so is paying much less interest especially as Affirmative only charges interest on monies drawn.

Want to know more about deferred consideration and how it could help your customers?

Call 08000 44 84 84 or email

For our current lending criteria, please click here.

Authorised and regulated by the Financial Conduct Authority.  We are able to offer both regulated and unregulated loans.

We are completing and funding loans now!

You can also read another of our deferred consideration case studies by clicking below to see how we helped a customer make a £360,000 purchase work, that allowed a £200,000 net profit to be made.

Read Here

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