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Post by ladywhitenap on Apr 26, 2019 10:50:19 GMT
A quick scan through shows that planning permission granted in 2015 is in the process of being renewed. The application to renew was ade in Nov 2018 and is still to be decided. I can't help wondering why the renewal has not gone through yet. The determination deadline is stated as 15th February 2019 ie well over 2 months ago. In the light of an application for 70% LTV we certainly don't want a potential planning decision hitting the market value of the land Anyone else concerned by this?
LW
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Post by Ace on Apr 26, 2019 10:52:52 GMT
Borrower: UK L* P* Ltd
Amount: £1,085,000
Term: 12 months (6 months minimum term)
Rate: 14% - Interest only
Primary Security: First ranking legal charge over land
Secondary Security: Company debenture Director Personal Guarantee
Instant Returns: Enabled
Loan Live: bidding from 2pm 26 April 2019
Related loans: none. This is a new borrower
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sapphire
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Post by sapphire on Apr 26, 2019 11:13:23 GMT
What stands out to me is the significant difference between the Valuation provided (£1.55m) and the (proposed) purchase price (£720K).
Is there a reason why the seller is willing to sell at what appears to be a significant discount to the market value OR Is the "true" current market value closer to the purchase price (£720K) rather than the valuation (£1.55m)?
Am I missing something?
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andy1
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Post by andy1 on Apr 26, 2019 11:19:59 GMT
Personally I'm concerned by a lot of things.
The market value of the land is £720k. That's what the guy is paying for it, that's what it's worth right now. The borrower is putting nothing at all into this so it's all a bit of a free punt for him. IF the PP all goes through fine the site could be worth more if the right buyer can be found within 1 year so if everything goes perfectly according to plan we get paid back inside 12 months. If the PP isn't sorted and the right buyer isn't found inside 1 year, the retained interest runs out and there's no income from the asset to pay interest leading to a default. Upon default the land is sold at its market value of maybe £720k leading to 35% haircut, maybe more.
So max upside = 14%, max downside = 35%+.
I'm going to pass on this one...
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Post by Ace on Apr 26, 2019 11:28:21 GMT
ablrate , can you please confirm that the land is actually being purchased for £720k? Or, is that just the part of the purchase price that's coming from the loan, and the borrower is also injecting some of his own cash into the purchase?
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sapphire
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Post by sapphire on Apr 26, 2019 11:31:24 GMT
The following points in the VR appear to be conflicting:
13.1 states "We have given consideration to the matters referred to below but do not consider any provide potential for additional value in this case. Marriage value Hope value Alternative use value Special purchaser value"
but 9.4 states: "However, in the preparation of our valuation, for security purposes, it is necessary to make a number of 'special assumptions' summarised as follows:- • Unrestricted access is available to the adopted highway in order to facilitate the site's development • The development of the property in connection with employment land use does not incur abnormal development costs • Planning permission would be forthcoming for development in connection with uses including 81c, 82 and 88 of the Town & Country Planning (Use Classes Order) • There are no detrimental implications and/or abnormal development costs associated with flood risk"
As planning permission has not yet been granted, isn't assuming that this is forthcoming effectively including a "Hope value" i.e. in conflict to what is stated in 13.1?
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Post by dan1 on Apr 26, 2019 11:34:08 GMT
/Mod hat on Catching up here but I've just merged the post from Ace into this thread. sapphire - feel free to permanently delete your post on the other thread (http://p2pindependentforum.com/post/325033/thread). ladywhitenap - I've just corrected the loan number on your OP (122 instead of 112).
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iRobot
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Post by iRobot on Apr 26, 2019 12:14:59 GMT
Is there a planning date for determination anywhere. I can't find it. 'Determination Deadline Fri 15 Feb 2019'
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sapphire
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Post by sapphire on Apr 26, 2019 12:23:42 GMT
Personally I'm concerned by a lot of things. The market value of the land is £720k. That's what the guy is paying for it, that's what it's worth right now. The borrower is putting nothing at all into this so it's all a bit of a free punt for him. IF the PP all goes through fine the site could be worth more if the right buyer can be found within 1 year so if everything goes perfectly according to plan we get paid back inside 12 months. If the PP isn't sorted and the right buyer isn't found inside 1 year, the retained interest runs out and there's no income from the asset to pay interest leading to a default. Upon default the land is sold at its market value of maybe £720k leading to 35% haircut, maybe more. So max upside = 14%, max downside = 35%+. I'm going to pass on this one... ablrate , If the 'true' current market value is closer to the purchase price (£720K), I think it is misleading to market this is as a 70% LTV loan. Using a valuation based on 'special assumptions' (and including a 'hope' value that Planning permission will be granted) to treat this as a 70% LTV loan is illusory and not something I think a reputable platform like yours should be undertaking. No only is this misleading, I think loan offers such as these provide ammunition to the regulators to restrict retail investors from P2P investing - and so has a negative impact to the growth of the P2P industry in the long term.
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macq
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Post by macq on Apr 26, 2019 12:28:18 GMT
May only be sales speak(from both sides) but i find it strange that the doc's say it could be sold on to developers as agents see strong demand for the site - but agents could not get a sale during the first consent from 2015 which then lapsed?
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iRobot
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Post by iRobot on Apr 26, 2019 12:39:15 GMT
I should have said a local authority meeting date to determine approval. Not currently listed on 30 Apr Agenda. Next PC meeting after that is 28 May.
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criston
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Post by criston on Apr 26, 2019 12:45:48 GMT
So are we really being asked to invest in Land without Planning Permission on the basis that it had it previously. Surely not.
Am I missing something ?
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blender
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Post by blender on Apr 26, 2019 12:48:13 GMT
Personally I'm concerned by a lot of things. The market value of the land is £720k. That's what the guy is paying for it, that's what it's worth right now. The borrower is putting nothing at all into this so it's all a bit of a free punt for him. IF the PP all goes through fine the site could be worth more if the right buyer can be found within 1 year so if everything goes perfectly according to plan we get paid back inside 12 months. If the PP isn't sorted and the right buyer isn't found inside 1 year, the retained interest runs out and there's no income from the asset to pay interest leading to a default. Upon default the land is sold at its market value of maybe £720k leading to 35% haircut, maybe more. So max upside = 14%, max downside = 35%+. I'm going to pass on this one... ablrate , If the 'true' current market value is closer to the purchase price (£720K), I think it is misleading to market this is as a 70% LTV loan. Using a valuation based on 'special assumptions' (and including a 'hope' value that Planning permission will be granted) to treat this as a 70% LTV loan is illusory and not something I think a reputable platform like yours should be undertaking. No only is this misleading, I think loan offers such as these provide ammunition to the regulators to restrict retail investors from P2P investing - and so has a negative impact to the growth of the P2P industry in the long term. There are issues here, but I do not think there is anything wrong with the LTV. We do rather insist on a rigorous process for determining the security value (which is what we need) and we like to see an independent professional valuation used as the basis as the LTV. If the purchase price plus cash invested were used as the value then we would complain, rightly. It is also good that we are told the purchase price. When I read the email I thought we would not get this, and was pleased to see such full disclosure - even though it raises some serious questions about the difference between the two. We have all the numbers and can make our own assessment of whether we accept the valuation and LTV. Glad I am not a local council tax payer - this proposal does not compliment their council much.
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macq
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Post by macq on Apr 26, 2019 12:56:03 GMT
when doing a search of the director is anybody else smiling at the result that comes up like a swear word for a company name
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eeyore
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Post by eeyore on Apr 26, 2019 13:06:09 GMT
Does the borrower actually own this property already? The borrowing proposal states on page 8 "The funds will be used to acquire and advance the site:". If not, then how can there be a reliable valuation which is twice the yet-to-be-completed purchase price which is disclosed in the proposal?
I, too, am sufficiently confused and doubtful about this proposal that I'm not committing any funds.
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