nick
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Post by nick on Feb 25, 2016 19:22:14 GMT
Definitely a lemon. I wouldn't want to be holding any if PP is denied. When you start placing reliance on a PG as security you know you are in trouble......
It will be interesting to see what the pre-funding allocation will be. I usually pre-fund every loan to diversify as credit concentration is by far my biggest risk, but I'm giving this one a miss as it makes no sense to take on the added risk for the same return. It is true that you could just hold it for a few weeks/months, but that assumes that the extreme liquidity in the secondary market will continue. I've notice liquidity in the SM in a number of other platforms has reduced markedly in the new year - not sure why. A significant increase in pipeline or drop-off in demand in the SM could make this loan harder to sell in future, particularly as it appears to be the most speculative I've seen to date and worst risk/reward - if any loan part is going to sit on the shelf unwanted over other available loans this will be prime candidate........
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bjorn
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Post by bjorn on Feb 25, 2016 19:27:55 GMT
There's also the question of why the borrower needs £1.3m for a site for which he doesn't even know whether he's going to get planning permission yet.
I wonder what he's purchasing the site for. Surely that's the value that should be used in the LTV.
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Post by carbonr1 on Feb 25, 2016 19:36:46 GMT
I'm quite new to SS and quite glad that other members have the time to read through all the small print as I work long hours and don't have the time to do DD, thanks to previous remarks I'm passing on this one and hopefully pick some better off loads on SM.
Thanks guys keep up the great work.
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guff
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Post by guff on Feb 25, 2016 19:40:39 GMT
Appendix 6. Para 21 (Page 35/50):
I'm out.
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registerme
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Post by registerme on Feb 25, 2016 19:45:41 GMT
I came to the same conclusions as you guys and gals, for the same reasons, so I won't be taking any. However, I think the planning permission is a doozy. If I were the council I'd grant it just to get the site cleaned up....
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Feb 25, 2016 19:54:44 GMT
savingstream . What happens if the borrower disturbs the land and creates an environmental issue, then defaults? Will lenders be liable for clearing up the mess? This land could actually have a negative value. EDIT: An example of negative value is Pipeline loan "PBL - Land in Wales with PP for large commercial unit". The BL particulars state: "We understand from the applicants, that the previous developer expended circa £2,500,000, for a full clean-up of the site and no large sums are therefore expected."
That's £500,000 more than the current valuation of £2M.
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Post by Deleted on Feb 25, 2016 20:09:10 GMT
Lets see if the personal guarantee is enough to get this one funded.
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adrianc
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Post by adrianc on Feb 25, 2016 20:11:04 GMT
I came to the same conclusions as you guys and gals, for the same reasons, so I won't be taking any. However, I think the planning permission is a doozy. If I were the council I'd grant it just to get the site cleaned up.... Granting PP doesn't mean work's ever going to start, of course - it was granted in 1990, then extended in 94/5...
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 25, 2016 20:15:25 GMT
I came to the same conclusions as you guys and gals, for the same reasons, so I won't be taking any. However, I think the planning permission is a doozy. If I were the council I'd grant it just to get the site cleaned up.... Granting PP doesn't mean work's ever going to start, of course - it was granted in 1990, then extended in 94/5... PP doesn't mean that work will ever start, but at least it would give the security some value  Only outline permission was granted for housing in 1990 (then extended in 1994 and 1995)
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ben
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Post by ben on Feb 25, 2016 20:28:41 GMT
Another one I will not be touching, why borrow so much now when he does not even have planning permission, all flags flying will probably take a a year before 1st brick is laid.
As has been put before the land is worthless without planning permission
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jcb208
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Post by jcb208 on Feb 25, 2016 20:36:41 GMT
Will be giving this a skip as well,So many better loans coming up soon
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 25, 2016 20:37:55 GMT
Another one I will not be touching, why borrow so much now when he does not even have planning permission, all flags flying will probably take a a year before 1st brick is laid. As has been put before the land is worthless without planning permission I really don't think that there is any chance of any construction being carried out on this land in the next couple of years. However, a borrowers strategy has little consequence on SS decision to provide a bridging loan; although it's always nice to know. It's all about the security, and SS must have some information to lead them to think that PP will be provided, overwise they wouldn't have provided the loan. However, up until that point, there is no security, which means if the loan defaults before PP is provided, there is no way of reclaiming any investments. Tell you what; I'm glad this falls under the new T&Cs and not the old ones Under the overview, SS is keen to point out that the borrower has "over £5m in liquid assets", but I think people are rather cautious with a PG on these forums!
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ben
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Post by ben on Feb 25, 2016 20:42:52 GMT
Another one I will not be touching, why borrow so much now when he does not even have planning permission, all flags flying will probably take a a year before 1st brick is laid. As has been put before the land is worthless without planning permission I really don't think that there is any chance of any construction being carried out on this land in the next couple of years. However, a borrowers strategy has little consequence on SS decision to provide a bridging loan; although it's always nice to know. It's all about the security, and SS must have some information to lead them to think that PP will be provided, overwise they wouldn't have provided the loan. However, up until that point, there is no security, which means if the loan defaults before PP is provided, there is no way of reclaiming any investments. Tell you what; I'm glad this falls under the new T&Cs and not the old ones I doubt it would have been launched under the old terms
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Feb 25, 2016 20:53:17 GMT
I really don't think that there is any chance of any construction being carried out on this land in the next couple of years. However, a borrowers strategy has little consequence on SS decision to provide a bridging loan; although it's always nice to know. It's all about the security, and SS must have some information to lead them to think that PP will be provided, overwise they wouldn't have provided the loan. However, up until that point, there is no security, which means if the loan defaults before PP is provided, there is no way of reclaiming any investments. Tell you what; I'm glad this falls under the new T&Cs and not the old ones I doubt it would have been launched under the old terms You misunderstand; I know that it won't be launched under the old terms, just that for the security of the SS platform I'm glad that the new T&Cs are in place. On the old T&Cs a defaulted loan could affect all investors whether you had invested in the defaulted loan or not.
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alanp
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Post by alanp on Feb 25, 2016 20:58:09 GMT
They could just be taking a calculated "punt".
Buy the land at a low value with an expectation that they will get PP and the value will double/treble/quadruple or whatever.
Then, use borrowed money to do it without tying up your own capital.
In this scenario the repayment could well be OK as they - theoretically - have the funds to pay everyone back and put it on a back burner until planning rules & regs become a bit more flexible (which is likely as we are running out of space essentially) or technology improvements make the clear up cheaper and easier (again likely in my view as there are polluted sites all over the place that become a lot more viable if they can be economically and safely cleaned).
In the meantime I'M OUT.
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