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Post by grodecki on Jun 2, 2016 14:52:38 GMT
Short length and uncertainty for me means despite the London market being a busy one, this is a low value investment. Not going to remotely try and game it, hoping for a few hundred quid at max.
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Post by mrclondon on Jun 2, 2016 14:52:44 GMT
locutus - the valuer of the SS flat has clearly decided that there is no need for a restricted marketing period as it would be expected to sell quickly (almost all central London properties go to sealed bids unless there is something obviously wrong with the property ... such as a very short lease). However looking at the comparables, my inclination would be to consider a worst case valuation of £2000 per sq foot i.e. c. £2.2m.
The valuation report doesn't explicitly state whether its based on the completed renovation, for safety I'd assume it is. This isn't superprime property we are talking about, and the premium for such location I think is justified. So my personal view is that a £1.7m loan is well secured.
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bloodycat
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Post by bloodycat on Jun 2, 2016 15:06:02 GMT
Valuations always have a large margin of error in them. It's not unusual for 2 different estate agents to have a difference of 20% when asked to value a property for sale.
It also seems to be rather more than coincidence that valuations for loan purposes frequently come out as exactly the amount required (possibly subject to some remedial works). Couldn't possibly have anything to do with the fact that when instructed the forms usually ask what the expected purchase price or loan required is could it?
Personally I wouldn't go anywhere near a multi-million pound London residential property with a LTV anywhere near 70%. There again I've been of the opinion that the current level of house prices generally, never mind in London, are overpriced for a number of years so what do I know.
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locutus
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Post by locutus on Jun 2, 2016 15:21:43 GMT
<snip> There again I've been of the opinion that the current level of house prices generally, never mind in London, are overpriced for a number of years so what do I know. For what it is worth, I agree with you. However, London is a whole different ball game. I attended an Allsop property auction recently and semi detached properties in a bad state of repair which would fetch no more than £150k up North were being fought over in frenzied bidding wars for well over £1 million. Just an observation, but it seemed mainly Indians attending the auction and bidding the highest sums. I'm like you and don't think they're worth anywhere near that amount but we're obviously not the target market for these properties. Consequently, I'll be putting my trust in the professional valuation and putting some cash in.
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Post by mrclondon on Jun 2, 2016 15:24:02 GMT
Valuations always have a large margin of error in them. It's not unusual for 2 different estate agents to have a difference of 20% when asked to value a property for sale.
Agreed, however a RICS red book valuation is not an estate agents valuation. The valuation report quotes the actual price paid for 6 comparable flats over the last 18 months, with the price paid varying between £2033 and £2175 per square foot for 100 plus year leases. This property at 1089 sq foot with a 119 year lease implies a comparable valuation of £2.2m to £2.4m.
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Post by mrclondon on Jun 2, 2016 15:38:20 GMT
However, London is a whole different ball game. I attended an Allsop property auction recently and semi detached properties in a bad state of repair which would fetch no more than £150k up North were being fought over in frenzied bidding wars for well over £1 million. Just an observation, but it seemed mainly Indians attending the auction and bidding the highest sums. I'm like you and don't think they're worth anywhere near that amount but we're obviously not the target market for these properties.
A large semi with lounge, dining room, two double bedrooms and a single bedroom plus largeish kitchen will be reconfigured as 9 bedrooms (the lounge, dining room, and the double bedrooms each split into 2 rooms). At say £1000 pcm per room that's £9000 per month or £108,000 pa. Lets say £90k pa net of costs or 7.5% investment yield on £1.2m purchase price plus reconfiguration of internals.
London is desperately short of property, and people will willingly pay £1000 pcm to live in a rabbit hutch room. We may feel this is unethical, but others will not.
(I watched the conversion of one property I pass on the walk to my local tube station .... the rooms so created were triangular as the partition was added along the room diagonal )
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Post by lb on Jun 2, 2016 15:44:20 GMT
locutus - the valuer of the SS flat has clearly decided that there is no need for a restricted marketing period as it would be expected to sell quickly (almost all central London properties go to sealed bids unless there is something obviously wrong with the property ... such as a very short lease). However looking at the comparables, my inclination would be to consider a worst case valuation of £2000 per sq foot i.e. c. £2.2m.
The valuation report doesn't explicitly state whether its based on the completed renovation, for safety I'd assume it is. This isn't superprime property we are talking about, and the premium for such location I think is justified. So my personal view is that a £1.7m loan is well secured. This is simply not the case unless you are going back 18 months the stamp duty changes last year massively killed the liquidity in the £2m+ market and it shows no signs of recovering (not to mention the additional 3% on top of all that since April 2016 which has made it even worse)
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Post by GSV3MIaC on Jun 2, 2016 15:44:25 GMT
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ped
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Post by ped on Jun 2, 2016 18:30:17 GMT
So from the comments above maybe 1800 investors approx £1000 each for those who want it?
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mikes1531
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Post by mikes1531 on Jun 2, 2016 18:56:21 GMT
So from the comments above maybe 1800 investors approx £1000 each for those who want it? If that's the case then the allocation factor would be 97%. Like some others, I'm expecting an allocation factor of 25-33% and have set my pre-funding with that in mind. If I'm wrong, I could bring in a bit more money, but I'll probably try to sell a bit more of my existing parts. (I'm expecting the SM to continue to be very liquid at least for a little while longer.)
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Post by holmesy999 on Jun 2, 2016 19:09:44 GMT
it's true that this loan might have hairs all over it. But then again, if it all made sense on paper, why would they come here for a loan? If it was a no brainer reno job, they would be able to source funds elsewhere.
I think the million £ question is would you rather have a default loan in a property in london, or a default loan in a..... garden centre?
I personally think there needs to be geographical diversification as well as portfolio/asset diversification, and a london property might be able to offset the abundance of the north and the south west of the country
(unless you subscribe to if london sneezes the rest gets the flu....)
If it defaults, there is always the option we might be all p2p landlords!!!!!
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Post by GSV3MIaC on Jun 2, 2016 19:15:04 GMT
it's true that this loan might have hairs all over it. But then again, if it all made sense on paper, why would they come here for a loan? If it was a no brainer reno job, they would be able to source funds elsewhere. I think the million £ question is would you rather have a default loan in a property in london, or a default loan in a..... garden centre? Or indeed, the other available option .. terraced cliff-top informal wildlife reserve on the coast near Hastings? Tough call, but I'd probably opt for the garden centre.
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Post by harvey on Jun 2, 2016 20:05:15 GMT
I've just read the valuation report for this one and my first thought was that a 119 year unexpired lease term is very nice indeed. No expensive lease extension costs to worry about or mortgage problems there.
Also being a flat in central London there is plenty of good comparable evidence in the close proximity and that is reliable evidence of market value.
With the above points in mind I feel quite comfortable with this one, it seems pretty good security for the loan even allowing for any consequences of a possible brexit or market downturns.
Definitely I feel a lot more comfortable with this one than I do with the St Leonards/ Hastings one!
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Post by mrclondon on Jun 2, 2016 20:46:30 GMT
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SteveT
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Post by SteveT on Jun 3, 2016 7:08:08 GMT
Or indeed, the other available option .. terraced cliff-top informal wildlife reserve on the coast near Hastings? Tough call, but I'd probably opt for the garden centre. On the other hand, the TC-TIWR is listed as a 12 months loan (versus 4 months for the flat). Unless sentiment swings radically in the coming months against SS / P2P / storing money anywhere other than buried in the garden (as it undoubtedly could), experience to date suggests a £2.1m loan will sell like hot cakes on the SM in 8-9 months' time 
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