A private school group has secured £1.75 million in bridging finance against a block of buy-to-let flats in West Kensington to address liquidity pressures stemming from VAT changes in the education sector.
Precise Mortgages completed the facility, which was arranged through broker Sirius Finance, against an unencumbered block of five buy-to-let flats valued at £2.865 million. JMW acted as legal advisers on the transaction.
VAT changes drive financing need
The borrower, who owns a group of private schools, faced increased cost pressure following the introduction of VAT on private school fees in January 2025. Rather than passing the additional costs to parents, the school operator chose to absorb them, creating a short-term need for working capital.
The financing structure was secured against the West Kensington property portfolio, with a planned asset sale established as the exit strategy. The loan-to-value ratio on the transaction was approximately 61 per cent based on the property valuation.
Alan Kimber, head of bridging at Precise, said the transaction was built around the unencumbered asset and clear exit plan. “With that in place, we were able to move quickly to release capital and support the borrower through a period of cost pressure,” he stated.
Bridging market activity
The transaction reflects continued 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, putting pressure on alternative financing channels.
Oliver Eastgate, associate at Sirius Finance, noted the collaboration between parties facilitated a smooth process. “They were quick to understand the challenges we faced and proactive in identifying practical solutions that worked for all parties involved,” he said.
The buy-to-let sector continues to provide collateral for commercial borrowing, with investors increasingly using property portfolios to access working capital for business purposes beyond traditional property investment.