Short leasehold in prime central London: bridging finance when banks say no

The flat is exactly what you want: a lateral conversion in a Belgravia mansion block, quiet street, the right postcode. The lease reads 73 years. Your private bank has said no, and two mortgage brokers have confirmed the same verdict: below 80 years, the flat is unmarketable for conventional lenders and their valuers apply a discount that makes the loan economics unworkable. The vendor wants to move, and another buyer is circling.

This is a familiar bind at the upper end of the London market. Leasehold tenure governs most prime central London flats, and the 80-year threshold is not a soft preference among lenders: it is a hard cut-off, because below it the cost of a statutory lease extension escalates sharply and a valuer cannot produce a number a credit committee will stand behind. The result: a creditworthy buyer with substantial assets, facing a property most banks will not touch at any rate.

Prime London bridging finance exists precisely for this situation. A direct private lender underwrites against the asset and the exit, and Rikvin considers short leases case by case, subject to terms, lending on the flat's current as-is value.

Why mainstream mortgage lenders stop at 80 years

The valuation problem

A leasehold flat with fewer than 80 years remaining is not unmortgageable because the property is defective. It is unmortgageable because of what happens when the next buyer tries to sell it. If a buyer later needs to sell on with, say, 68 years remaining, the pool of buyers who can finance the purchase shrinks sharply. Lenders know this, and their valuers will either decline to report or reduce the open-market value to reflect the restricted demand.

The 80-year mark matters for a second reason: it is the point at which "marriage value" enters the statutory lease extension formula under the Leasehold Reform, Housing and Urban Development Act 1993. Below 80 years, the freeholder is currently entitled to claim 50% of the uplift in value that a longer lease creates, pushing the premium materially higher. Every year below that threshold, the cost of extension rises further.

The Leasehold and Freehold Reform Act 2024 changes this picture. Once its valuation provisions are commenced, marriage value is abolished and statutory extensions lengthen to 990 years. The 50% figure and the 90-year extension described in this article are the current position, subject to that commencement: check where the provisions stand with your solicitor before pricing a premium.

Why creditworthy borrowers still get refused

The refusal is a policy outcome, not a judgement on the borrower. Most lenders require the lease at redemption to have at least 70 to 85 years remaining, so a 25-year mortgage on a flat with 73 years left fails the test before anyone looks at income or assets. That arithmetic is why a sub-80-year lease reads as an automatic no across most mortgage desks, and why no amount of personal wealth in the background changes it.

How prime London bridging finance bridges the leasehold gap

Lending against the asset and the exit

A private bridging lender does not follow the same origination criteria as a bank. Rikvin Capital considers these facilities case by case, subject to terms, and underwrites them against two things: the flat's current as-is value and the credibility of the exit. If the property is in Mayfair and the borrower has instructed specialist leasehold solicitors and can demonstrate the premium is fundable, that is a defensible security position.

LTV is set on the lower of purchase price and valuation, on the flat's current as-is value with the short lease, up to 75%. The extension matters for the exit: once it completes, the flat can refinance on conventional terms.

If you are at the stage of assessing whether your deal qualifies, speak to our team early: the conversation about exit credibility and premium fundability determines whether a term sheet can be issued quickly.

The bridge term and the Section 42 timeline

Section 42 of the 1993 Act gives qualifying leaseholders the right to extend a lease by 90 years on top of the existing term at a peppercorn ground rent, the position as it stands pending commencement of the 2024 Act's valuation provisions. The process begins with a formal notice served on the freeholder's solicitors. From there, the freeholder has two months to respond with a counter-notice. Negotiation, tribunal hearings if needed, and completion of the conveyance typically add another 4 to 12 months. The whole sequence commonly runs to 12–18 months from notice to registration at HM Land Registry.

A 12–24 month bridge fits that timeline cleanly. Interest can be rolled up so no monthly cash outflow disturbs the extension process. On completion of the extension, the flat refinances on conventional terms: the mortgage market that was closed is now open, at a materially higher value.

When a short-leasehold bridge is and is not the right tool

This structure makes sense when three things are true: the property is in a location where the extended value is both supportable and liquid, the borrower has a realistic path to fund the lease premium (from retained capital or a premium finance facility), and the exit is credible within the bridge term.

It is not the right tool if the freeholder is uncooperative or the title is complicated by multiple head-leases that would slow a tribunal process beyond the bridge term. Equally, if the plan is to sell at the short-lease value without extending, the bridge provides no structural advantage.

The main risk is timing. A statutory process that runs longer than expected (a disputed premium, a freeholder who takes the First-tier Tribunal (Property Chamber) route) can push the exit past the bridge term. Good solicitors and a realistic assessment of the premium at the outset reduce but do not eliminate this risk. Borrowers should model the worst-case timeline and confirm with their lender that an extension is available if needed. See how our lending process works for detail on how Rikvin structures and monitors facilities of this kind.