blender
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Post by blender on Jun 10, 2017 17:09:18 GMT
Hi Epicurean. It's a matter of tenses. The valuation was not made on the basis that planning permission had been granted, but on the assumption that planning permission will be granted. The proposal was the problem. The question is, is the cap of £500k a sufficient adjustment to allow the loan to proceed? The alternative being, presumably, to review all the documentation. Personally I think the adjustment sufficient and have deleted a number of my critical posts. I guess that all involved are wiser following this. At least we actually have the dialogue and people do take notice and make changes here. If you find a better platform than Ablrate, please let me know.
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metoo
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Post by metoo on Jun 10, 2017 18:38:15 GMT
Addendum to the Borrowing Proposal: "The valuation is an 'as is' valuation and not based on planning permissions being granted."Valuation: "It is assumed that the site shall be demolished and planning sort [sic] for a new development to be erected in its place.""For valuation purposes we have assumed that the current use of the property falls within its current use classes order under the Town and Country Planning (Use Classes) Order 1987 and that the property has full unconditional consent for this use and development as described above"I don't know how you square that circle. I find it very hard to believe the land is worth £995k without planning permission. ... I interpret the bold you have highlighted from the valuer's report as meaning that the current building does not contravene planning requirements for its current (former) use. That sentence does not give me concern. It is unclear to me from the VR how the professional opinion of value was formed. Some of the comparables are similar properties but in good repair. I did not see explanation of how the derelict state was factored in. One of the comparables is a development site which seems to have current planning consent. I did not see explanation for how this is to be compared to a site without planning consent. Clearly planning should readily be obtainable. It does seem the valuer considered potential as a development site in general terms. It does not seem that the valuer was under a misapprehension that current planning permission was in place, given that the VR states " It is assumed that the site shall be demolished and planning sort for a new development to be erected in its place." Sadly it is far from uncommon that professional VRs seem unsatisfactory. However, the report is provided, so investors have an opportunity to review it for themselves before lending, and can form their own opinion of its merits. The reduced size of the loan to ablrate lenders can be factored in to the decision.
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Post by epicurean on Jun 11, 2017 20:34:22 GMT
Gold standard valuation: - independence of valuer undoubted and instructed by lender - appropriate valuation methodology on Red Book basis - crystal clear with any assumptions underpinning value detailed (often the result of reviewing multiple drafts) - environmental report completed - valuer has seen Report on Title (often only prepared later so valuer asked to issue side letter confirming no impact on value) - adequate PI cover agreed - adequate disclosure language agreed (so lender not restrained if loan sought to be sold on the secondary market)
We have: - no independence as valuation instructed by the borrower - unsuitable valuation methodology albeit alleged Red Book basis - ambiguous language with assumptions unclear - no environmental report (noting this is a particular risk and any cost of clean up will come directly out of land value) - valuer hasn't seen a RoT - unknown PI cover and no benefit from it in any case as not instructed by lender - restrictions to disclosure (but less of an issue here)
The gulf between them is so far that I don't understand how the risk can be accepted at nearly any margin.
It ultimately comes to: - What is my key risk? That I've lent £500k against land potentially worth significantly less than that - How has my valuation due diligence helped mitigate that? Not at all
Lending £500k rather than £750k is clearly improved but I've no idea if I'm comfortable with that because I've no idea how much the land (main security) is worth.
I don't want to get into the semantics of the valuation (the fact that any debate is necessary is telling enough). I would just state that if the £995k valuation really represents the value of the land without planning permission that implies a GDV of several million for a couple of HMO houses in Birmingham which seems unlikely.
For the avoidance of doubt, I have no axe to grind and like the idea of P2P. But I do hope people really understand the risks as much as they do the rewards. I'm sure those replying here do but not so sure about the average investor.
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Post by brummiefred on Sept 17, 2017 15:59:34 GMT
Drove past whilst in the area yesterday and no activity noted. Site surrounded by hoarding and no signs of previous buildings.
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metoo
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Post by metoo on Sept 24, 2017 22:39:48 GMT
Drove past whilst in the area yesterday and no activity noted. Site surrounded by hoarding and no signs of previous buildings. Driving by may not have given a good view behind the hoardings brummiefred . Photos taken today by a relative show those new hoardings along the frontage as you noted, but the original derelict buildings do remain, with ground floor windows boarded up since the valuer's 6 April pictures.
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garfield
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Post by garfield on Jul 29, 2018 21:28:06 GMT
Negative yields on this loan. Needs restricting, ablrate.
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Post by ablrate on Jul 30, 2018 8:36:50 GMT
Negative yields on this loan. Needs restricting, ablrate.
Thanks ..sorted
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ptr120
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Post by ptr120 on Sept 21, 2018 21:59:29 GMT
Dear ablrate CH have recently updated me to a change on this loan - would you be able to comment? I can't recall off the top of my head (and forgive me, I'm too lazy to go back and read the docs at this time on a Friday) if there is a PG involved in this loan, but confirmation that it remains in place would be appreciated.
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elliotn
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Post by elliotn on Sept 22, 2018 1:41:07 GMT
Dear ablrate CH have recently updated me to a change on this loan - would you be able to comment? I can't recall off the top of my head (and forgive me, I'm too lazy to go back and read the docs at this time on a Friday) if there is a PG involved in this loan, but confirmation that it remains in place would be appreciated. There is PG, for this borrower I can only see discontinued Gazette strike for late CS (although it wasn’t a good month for some other Sig****** named co’s). New director with property experience appointed end July might suggest some movement. ablrate , do we know how clearance of the PP conditions or the refi is progressing, thanks.
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blender
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Post by blender on Sept 22, 2018 7:45:07 GMT
I think our lazy friend means the resignation of a director of the borrower company. I no longer hold 74 and also will not be reading all the documents on this occasion.
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boundah
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Post by boundah on Dec 3, 2018 18:02:56 GMT
Update email: 6 month extension. The uplift in valuation (if it can be believed) is welcome news.
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nw99
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Post by nw99 on Dec 3, 2018 18:54:30 GMT
Been a great investment this one bought at a discount
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elliotn
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Post by elliotn on Dec 4, 2018 14:46:28 GMT
Been a great investment this one bought at a discount Count your winnings after redemption.
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blender
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Post by blender on Dec 4, 2018 15:36:07 GMT
Been a great investment this one bought at a discount Count your winnings after redemption. Maybe nw99 has just sold it after buying at a discount. I don't think nw99 holds for redemption.
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nw99
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Post by nw99 on Dec 4, 2018 18:28:57 GMT
You are dead right there
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