Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.

Bridging Finance Used for Lease Extension on St John’s Wood Flat

A property investor has secured £1,462,500 in bridging finance from SDKA to purchase a three-bedroom apartment in the Yoo Building, St John’s Wood. The loan term is being used to pursue a Section 42 lease extension, with the aim of expanding future refinancing options.

The apartment is located in one of London’s higher-value postcodes. According to the report, high ground rent on the property currently restricts the number of buy-to-let lenders willing to offer term mortgages against it.

Lease Extension Strategy

By serving a Section 42 notice during the bridging loan term, the borrower can extend the lease and reduce the annual ground rent liability. This approach is intended to bring the property within the lending criteria of a wider pool of lenders. The Section 42 process typically takes between three and twelve months to complete.

The deal was arranged by Jack Cuthbert, a high-net-worth finance broker at Articus Finance, and completed at 75% loan-to-value on a flat rate of 0.84% per calendar month over 12 months.

Lender Profile

SDKA, founded in 2016, is an unregulated bridging lender operating across England, Wales, and Scotland. The company offers fixed interest rates from 0.84% per calendar month on residential, semi-commercial, and commercial properties, up to a maximum loan-to-value of 75%.

The case highlights how bridging finance is being used to address ground rent issues, which have become more prominent since mortgage lenders tightened criteria on properties with high ground rent charges in recent years.