Wimbledon construction - renewal (2620469502 -final) DEFAULT

Somewhat mixed news from my visit to the development yesterday lunchtime. The good news is work continues (at least for now) despite the administration. The bad news is its not going to be easy (in my non-expert opinion) to achieve sale prices that cover all the debt.

Location is 1.25 miles from Raynes Park station. There is a bus route that covers slightly over half that distance running every 12 minutes, and a Waitrose and Coop near the station. The properties are overlooking the local Rugby club's grounds, the far side of which is the A3, a motorway standard dual carriageway. The road out front is quite narrow, and match day traffic and PA noise nuisance is inevitable.

The properties appear structurally complete, but the small front gardens are still a mess of earth, rubble and building supplies. The properties are separated by a fairly narrow shared drive sloping down to the lower ground level parking. There appears to be very narrow rear gardens. I talked to the site manager posing as a potential buyer, he seemed really cagey and evasive in most of his responses. He claimed they will be finished in 4-6 weeks but his body language suggested otherwise. I asked about layout - 4 or 5 bed ? (remember the loan details say 5 beds) After a bit of pressing I established that they are actually 4 bed - one bedroom on the lower ground floor that they prefer to call the cinema room, lounge/kitchen on the ground floor, 2 en-suite bedrooms on the first floor, and a bedroom in the loft they prefer to call the study. A builder sat outside munching his lunch, helpfully added that the loft room could if needs must be divided into two to make a 5th bedroom. Which feels somewhat at odds with what the Savills valuation report (pre-build) suggested.

I asked which estate agent I should contact. The best I could achieve is a mumble that estate agencies have been approached. OK, maybe the administration of the borrower was on his mind, but if the properties are indeed 4-6 weeks off completion, now is the time they should be heavily marketing them.

From what I could see from the outside these do not feel to be especially big properties, they share a driveway / entrance gate, the location whilst reasonable is a bit far from the station, and there will be disturbance on rugby match days. Looking at what other properties on this road have sold for, some as recently as 2016, and looking at the photos of said properties, the valuation of £3.8m each for these two properties is pure fantasy. Number 54 (which must be close by), a 5 bed sold for £1.7m in August 2015. In my non-expert opinion I would say these two properties will achieve £1.8m to £2m at best, and possibly as little as £1.6m. It feels an awful long stretch to reach the £2.6m each needed to cover the combined debt, and I can't see the 1st charge holder could justify waiting for offers at a level so far above the immediate area's ceiling. And two identicals coming on the market at the same time isn't going to make it any easier. There are relatively few for sale boards in the area, so priced correctly they should sell fairly quickly.

My conclusion, hubris by the borrower, egged on by "valuers" who don't seem to inhabit the same planet as the rest of us. The grim reality is this 3rd charge loan is potentially a devastating result for FS lenders, and one which could possibly have been avoided if FS had commissioned their own independent valuation of the part built property before becoming involved.  I hope I'm proved wrong.