What Is Residual Stock Finance? A Guide for Property Developers

gareth150
Aug 3
2 min read

Residual stock finance is a powerful tool for property developers holding completed but unsold units after construction. At Assurity Capital, we regularly assist developers in unlocking equity from their remaining inventory to repay lenders, fund new projects, or support cash flow.

In this article, we’ll explain what residual stock finance is, how it works, and when it can benefit your development business.

What Is Residual Stock?

Residual stock refers to the unsold apartments, townhouses or units in a completed residential or commercial development.

Once construction is finished and the Occupation Certificate (OC) is issued, developers may still have several units yet to be sold. These are considered the “residual” stock.

Rather than wait for individual sales to finalise, developers can access short-term funding using these remaining units as security.

What Is Residual Stock Finance?

Residual stock finance is a short-term loan secured against the completed, unsold stock of a development project. It allows developers to:

Refinance construction debt or other short-term facilities
Release equity tied up in the project
Avoid fire-sale pricing by giving more time for unit sales
Fund new projects or meet other business obligations

At Assurity Capital, we offer flexible, private loans secured against residual stock—even where traditional lenders may not assist due to pre-sale shortfalls or debt covenants.

When Is Residual Stock Finance Used?

You’ve completed construction and received your OC
You have multiple unsold units still on the market
The original construction loan is expiring or requires full repayment
You need funds to start your next project, but capital is locked in the current one
You want to avoid discounting units to meet sales deadlines

This type of funding is often used post-construction while units are being marketed and sold at retail prices.

Typical Loan Features

Feature	Description
Security	Completed units or townhouses
LVR	Up to 65–70% of "as-is" valuation
Loan Term	3 to 12 months
Repayment	Often interest-only, with balloon at end
Exit Strategy	Sale of units or refinance

Example Scenario

A developer in Parramatta completes a 20-unit apartment project. Twelve units are sold, but 8 remain. The construction loan is due for repayment, and the bank won’t extend. Assurity Capital steps in with a 6-month residual stock loan, allowing the developer to repay their bank, maintain unit pricing, and avoid fire-sale discounts.