It seems the valuer was optimistic to say the least...perhaps it's a lesson to us all to be wary of the valuations of "one-off" unique properties particularly when they're valued in the plus million bracket
Zoopla still gives it around the original valuation of 1.7M but looks like its been on the market a good while and is now on with at least two different agents one of whom has dropped asking price several times.
2nd charge with a stated LTV of 70% on (as phil says) a bespoke property should and did demand a higher interest rate. Whether 0.9 is worth it for the risk is what we have to weigh up. I certainly don't want to gloat not least because I get it wrong many times, but at the time I must have judged 0.9 wasn't high enough for the risk.
I have to say I've learned the hard way to only consider the 90 day or less figure in the valuations. If none is given, I deduct a percentage to compensate.
Valuations on P2P platforms tend to be overly-optimistic, so, like you, I deduct a significant percentage off their valuations.
I didn't fund into this loan (thankfully) because £1.7m seemed unrealistic for a property in the West Midlands particularly when stamp duty has been massively hiked for larger value properties and is seriously affecting the £1m+ market.
I sincerely hope they hold the Surveyor to account, as such a severe miscalculation is absurd, but based on past experiences it's highly unlikely this will be the case.