This blog will discuss the reasons why Road and Sewer Bonds are important in new developments and how they can benefit all parties involved, as well as the public and residents of the new developments.
What is the Importance of Road and Sewer Bonds in New Developments?
Road and Sewer Bonds are important for new developments because they provide a financial guarantee that ensures developers will complete necessary infrastructure to acceptable standards, protecting local authorities, water companies, and future residents from developer failure.
Road and Sewer Bonds offer security against substandard work, delays, or abandonment, guaranteeing the infrastructure is finished and ready for public maintenance, and ensuring homeowners have functioning, adoptable roads and sewers.
Benefits of Road and Sewer Bonds for New Developments
Protection for Authorities and Public Funds
Financial Security:The primary purpose of these bonds is to protect local authorities and water companies by ensuring they are not left with incomplete or substandard roads and sewer systems if a developer fails to meet their contractual obligations.
Preventing Public Costs: By having a bond in place, the public purse is protected from the unforeseen costs of rectifying a developer’s failure, such as finishing the road or sewer construction themselves.
Benefits for Homebuyers and Residents
Functioning Infrastructure: Buyers of new homes can be confident that the roads and sewers serving their development will be completed to a satisfactory standard.
Avoidance of Unadopted Infrastructure: The bond helps prevent homes from being left with unadopted roads and sewers that remain the responsibility of the residents rather than the local authorities.
Long-Term Viability: By ensuring that essential infrastructure is built correctly from the outset, the bonds support the long-term success and sustainability of new developments.
How Road and Sewer Bonds Help With New Developments
The main way that Road and Sewer Bonds help with new developments is by ensuring quality and timely completion of the works. Road and Sewer Bonds guarantee that the roads or sewers are built to the specific standards required by the local authority or water company for public adoption.
If a developer fails to complete the works due to delays, poor workmanship, or insolvency, the Bond can be used to cover the costs of completing the required infrastructure to the correct standard. These bonds are often linked to specific agreements, such as a Section 38 Agreement for highways or a Section 104 Agreement for sewers, which outline the obligations for construction and adoption, meaning that they will ensure the work is completed.
Benefits Of Road & Sewer Bonds
Road and Sewer Bonds are not just a legal obligation for the adopting party; they also provide a huge amount of benefits. These benefits are, but not limited to;
Risk Mitigation – Road and Sewer Bonds help to mitigate risk as they provide both the adopting party and developers a financial guarantee. If developments do not adhere to the strict standards that local authorities/water companies have, then they can use the surety bond to cover the costs of bringing the development up to the correct standards.
Compliance – Surety bonds, such as Road and Sewer Bonds, help to ensure that developers are compliant when wishing to transfer legal responsibility of a road or sewer. This is because these bonds are put in place to ensure that the local authority/water company are compensated if a development does not meet its legal obligations or standards.
Freeing Up Vital Working Capital at Commencement – Road and Sewer Surety Bonds are an alternative to cash bonds, which require significant cash deposits. As such, by utilising Road and Sewer Bonds developers have access to vital working capital at project commencement.
How RS Bonds Can Help With Road and Sewer Bonds
RS Bonds is the only company in the UK that specialises solely and exclusively in the procurement of Road and Sewer Bonds. Our mission is to procure the best value road and sewer bonds for housebuilders as efficiently as possible.
Fill in our quote request form today to find out more about how long your Road and Sewer Bond will take to obtain.
