MTAR701 Putney development

[scratches head in disbelief .... ]

FCA COBS 4.2 Fair, Clear and not misleading communications


Surely as a minimum the loan details on the MT website for this loan should have been amended prior to the loan launching a short time ago to provide a warning that it is possible that the attached valuation report contains falsified information.

Better still would have been to delay the loan launch until a new independent valuation report could be sought from a surveyor with no prior connections to the borrower.

I'd have said "erroneous" rather than "falsified". (I don't think it's as bad as the loan elsewhere which I sat out because I couldn't work out what the security was, and the headline acreage was well in excess of actual acreage, but my fear that the positive feedback obtained from excellence in the customer facing side has led the Things into neglecting to a degree the backend work of dotting the i's and crossing then t's on loan details is strengthening.)

I'm still studying the VR (I wouldn't have thought to check the sales dates on the comparables), but I've just been struck by the thought that the VR doesn't actually contain a valuation of the property as is. There's the valuation of the garages as a investment property (with a pitiful rental yield of 3.5%), which doesn't include the value of the planning permission; there's the value of the cleared site with planning permission (but the site, as far as I know, isn't cleared - however the clearance costs are I expect small compared to the valuation, even if the garages turn out to have asbestos, rather than my guess of asphalt, roofs), and four GDVs, which in the absence of residual value calculations don't tell me anything (I don't know enough to estimate build costs).

Another observation is that the comparables are of residential properties, supporting the GDV, not the valuation.

The value is around £15m per acre (check my arithmetic?), which is eye-watering compared to my rule of thumb of £1m per acre, but this is London. Going to RightMove I find a vacant plot in Wimbledon of about twice the size advertised as offers in in excess of £2,750,000, another one of 3 times the area at a price of £6,750,000, another big plot (but of unspecified size) at £3,950,000. These support the valuation, except that I suspect Wimbledon is more expensive than Putney. A plot of twice the size in Kingston-on-Thames is at £1,750,000 (or about £8m per acre) with planning permission for two houses.

Oh dear ! I have recently been slowly incrementally transferring funds from two of my increasingly disappointing platforms to MT (no name, no pack drill - but you likely know those I refer to). The reason the previous platforms have become disappointing (having started out with significant promise) seems to be the addictive need to expand near exponentially - invariably (sadly it seems) at the expense of the quality of service and/or the loans available.

I have a sinking feeling that when looking in retrospect at MT (and I sincerely hope I'm wrong) this loan may be a defining event. It appears fraught with negatives in a way that I have not seen on MT before - although they are readily available on some other (now joke) platforms.

Needless to say I have declined and will await what seems more promising fare in the coming weeks (first MT loan I have declined - and I doubt I'm alone judging by its glacial progress to date).

The problem is that this sector is becoming increasingly competitive, MT either need to accept lower quality loans, slash rates for the best deals or shrink its loan book.  I do wonder when the time will come for the more astute forum members to exit this sector.  |Rates on some platforms look like falling to 9%, 7-8% after ISA fees and that is before defaults.  A trigger could be a crash in rates due to an influx of ISA money or a crash in stock markets, sucking funds away from p2p.

I have zero of my MT pot in Bu**. I signed up for MT at the end of October 2016 after reading a number of positive reviews on this site - and have not been disappointed to date. That was shortly after tranche one of Bu** was launched - and I had the benefit of subsequently reading many of the astute pre and post launch comments on that loan written here. Consequently, I declined subsequent tranches of that loan too - so I guess I was wrong that Put*** will actually be my first. However, I was broadly alluding to the fact that this loan was the first on MT which I have followed since its inception that has caused me to decline due it's seemingly dubious fundamentals - coupled with an unattractive interest rate (at least Bu** was 12% and a published LTV circa 50%).

It's the slowly emerging pattern and profile of a generic P2P platform's antecedence which I am currently focused on here. They start small (by definition) and offer great customer service at that juncture as the lender is needed as much (maybe more) than the borrower. The platform establishes - and maintains slowly accelerating growth through continued good customer service and generally carefully selected loans (as I suspect any duds at this embryonic stage could cause premature failure). Then there comes a tipping point - whereby the loan book gets too big to maintain the previous level of service without taking on more Staff - which the platform may be reluctant to do at this fragile point in its development? Furthermore, there then seems to develop an irresistible 'hell for leather' drive for growth at any cost - that 'addiction to exponential growth' I mentioned previously. Thereafter customer service gets sacrificed and the alter of growth - and the quality of the actual loans starts to deteriorate. Fast forward to one of the largest, well known and advanced P2P platforms and we have Foxtrot Charlie (or should that be Oscar?) who have long since stopped even pretending that private lenders (as opposed to II's) are of much consequence to them any longer.

I sincerely hope MT can overcome their growing pains without following the path to disappointment (for private lenders) that I have outlined above.

Finally (sorry about the length of this ramble), Liz wonders how long before 'the more astute investors' will exit this sector - a good question methinks? But where to I ask - for all the P2P issues I am still making more money here than elsewhere. I am fully diversified - stock market (by market sector, geography etc.), Precious metals, Property, Cash - there are of course others. Whilst like most here I will exit P2P if I see it's general demise looming (and there are myriad factors or combinations thereof that could be the catalyst) I do not yet see a broadly and easily available alternative to P2P. I have mitigated my risk to the greatest possible extent given my personal attitude to risk (quite adventurous), research avidly and keep abreast of macro-economic and geo-political developments - and will keep my eye firmly 'on the ball' with particular regard to P2P. So - if all you clever guys and girls out there can show me a trick I'm missing I will be 'all ears' !!

Ramble over.

Given the loan maturity date is 22nd March 2019, the probability is it drew down on Wednesday (22nd) shortly before the loan was launched for preview on the platform.