PBL144 - 34 D*** R***, P*****, S***** (9%)

Thanks C_D - you're a real star s***.

I have not lent on anything with an interest rate of 9% since the initial days I started on P2P. Will not appeal to me even if gold plated.

I shall try to contain my excitement.

70% LtV over a fairly unexciting, shabby, not exactly spacious 1960s BtL 3-bed semi (with PP to extend to 5) just south of Croydon. Or is it BtL? The valuer thought it was owner-occupied. They've seen a tenancy. But the applicant says it's vacant, honest. The closest comparable (July this year sale) suggests the LtV is more like 76%. Next door but one (detached) sold in January for £350k. This property is on the market with a Croydon agent for £525k currently (listed date on RM is 30th September).

At 12%, I'd not exactly be feeling the love... At 9%?

Somewhere (I think in this forum) I read that disposing of residential buildings as a security can be more problematic. I am not sure if this is true.

Can someone confirm or deny please?

If it is so, then saying that it is lower risk might not take into consideration this.

Gaining vacant possession requires a court order, whether owner-occupied or tenanted.

If it's let, then it can be taken as security with the tenant still in place, then all the usual rules apply to give at least two months notice if you want vacant possession - not forgetting the inability to give notice if a tenant is still in the first six months of an Assured Shorthold Tenancy, and all the various ways in which an s21 notice can be void if all the paperwork wasn't done correctly at the start of the tenancy. Or you could sell it with a sitting tenant, although that obviously hits the sale price.



I'm not very surprised at it being 9%. Think about it - instead of a nice round 1%/mo, this is a nice round 0.75%/month. 11% would be a messy 0.917%, 10% a similarly messy 0.833%.



Lower rate for same risk, same rate for higher risk - just different sides of the same coin, really.

Afert - was wondering what it is:
Adaptive Fault Tolerance in Real Time Systems

Fault tolerant system - It makes me think of various P2P platforms.

Adaptive - Well, that seems to be what we are witnessing with the move from 12% to 9%.

Real time - Well savingstream need to work a bit harder on this.

There are a few considerations that could positively or negatively affect the security, given that the valuer seems to be confused on this as to whether it is owner occupied or  let (something that would have been highlighted if not answered should the action of the moderators not have made C_D decline to post his usual DD)

Firstly if there is a tenant, what type of lease, assured, old style lease, whether it confers a "right to buy" etc.  Secondly the rent, eg would the nett rent cover a "rental" valuation of x% (x being the typical perscentage in such valuations for the area) thirdly how good is the covenant of the tenant?  Reletability* if tenant leaves.  Ease of gaining vacant possession etc etc.

Generally though the valuation should reflect all of those factors, if the valuers opinion is based upon a lack of knowledge then it should be revisited and treated with caution until if and when it does.

Enforcing the security should not ne any more difficult than doing so on any other property except of course you will be starting from "Forced Sale" valuations if you did, much like any other loan.

Edit Reletability is proably not a word but it is more expressive than "ease of finding a new tenant at the same or higher rent"