And your final sentence is nothing short of astonishing, you are gaining good positive ground fast. I'm not sure wot more you can do?!
Again, Certain Other Platforms, Please Note.
I echo this sentiment; the swift action on the recent default (of which I am part of) and the transparency, good amount of further details as requested by lenders here and openness to investors here is so refreshing and speaks volumes when compared to other more mature platforms.
Now if we can just have a property default to see how you handle those (preferably one I'm not invested in), that would be grand
Last Edit: Jul 21, 2017 9:21:54 GMT by angrykittens: We're lenders, not borrowers. Doh
The borrowers have confirmed that they are buying the site under value, this is due to the work they have undertaken over the past six months on the site. The site has had issues due to planning and they have spent months working in the archives of the Borough planner to resolving these issues. This work has cost in excess of £200k to date and has increased the saleability and value of the site considerably.
This is a high priority site for the local council and they have assisted with planning queries. The feedback they have received from the local council and agents is that there is a requirement for family homes in the area and that is the reason for the suggested changes to the planning approval, however this only affects one of the titles on the site and won’t delay commencement of the development.
The agent has had offers in excess of the advertised price but they were declined due the agreement in place with our borrowers. A lot of the work has been completed to validate the planning and work to date with foundations, piling, S106 payments plus other costs and reduction of S38 costs.
The valuation with the planning as it stands calculates at just over £20k per unit and just under £24k per unit if there are more houses and less apartments on the site. As the majority of the ground works have already been completed the value of the site has increased significantly.
We don’t acknowledge estate agents as valuers as we are only covered by the professional indemnity insurance of the surveyor providing the valuation and will call on this should there ever be a shortfall in any default.
This has been added to the loan details along with a PDF with aerial views of the land.
If anyone wants to meet on the site, we are happy to meet to cover off any questions or concerns anyone may have. We will also invite the borrowers and surveyors to attend.
I can only speak personally, but I would certainly look to invest in this loan fairly substantially due to the CB, if valuation was ignored and the purchase price used in its place ie 1.2m valuation and £840k loan (70% LTV)
FS and MT have done this previously to give a conservative estimate on the value
Currently the size of the loan is a little bit of a stretch for the platform when particularly combined with the question in value of the site
Your offer to meet at the site is admirable, however I think you'll find most of your lenders would not gain much insight into the value from a site visit, instead relying more on a desktop valuation based on the information that can be gleamed from other sources
I also query the increased value of 200k spent in planning working on the "issues", when in the next paragraph you mention the council sees this as a high priority site, so its difficult to understand why there where issues costing 200k to resolve. Combined with the changes in planning needed and potential further costs, this does seem to be a muddle and further questions the actual current value
Splitting the loan by titles does not address the loan value vs market purchase price concern. To most people, this site seems to be worth about £1.2m. Likewise, loans split by Title would still share the risk of same borrower and same development site.
Could the borrower look at borrowing less against this site, perhaps offer for part of the site so that his equity stake is proportionately larger and the apparent LTV reduced? This would offer a more realistic prospect of recovery in a default situation or refinance in 6 months time. I understand the revised planning application affects only one of the Titles on this site.
Yes, won't touch this at 100% ltpv - although understand why it happens ie borrower has additional costs to purchase only and platform needs to drive business - a big no-no for investors (as we're seeing in some of the recoveries starting to come through on a.n.other platform).