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

School Group Secures £1.75m Bridge Loan on West Kensington Buy-to-Let Block

A private school group has secured £1.75 million in bridging finance against a block of buy-to-let flats in West Kensington. The loan was arranged to address liquidity pressures resulting from VAT changes in the education sector.

Precise Mortgages completed the facility, which was arranged through broker Sirius Finance. The loan was secured against an unencumbered block of five buy-to-let flats valued at £2.865 million. Legal advice for the transaction was provided by JMW.

VAT Changes Prompt Financing Need

The school group faced increased cost pressures following the introduction of VAT on private school fees in January 2025. Instead of passing these additional costs to parents, the operator chose to absorb them, creating a short-term need for working capital. The bridging loan was secured against the West Kensington property portfolio, with a planned asset sale established as the exit strategy. The loan-to-value ratio for the transaction was approximately 61 per cent based on the property valuation.

Bridging Finance Market Activity

This transaction highlights ongoing activity in the bridging finance market as businesses seek short-term liquidity solutions. The case comes at a time when UK mortgage affordability has reached its tightest level since 2008, increasing demand for alternative financing channels. The buy-to-let sector continues to provide collateral for commercial borrowing, with investors using property portfolios to access working capital for business purposes beyond traditional property investment.