Thanks for this, i got it sorted.
This was basically correct:
# override default of no subsystems
#Subsystem sftp /usr/libexec/openssh/sftp-server
Subsystem sftp internal-sftp
Match Group sftponly
except for this line --> From ChrootDirectory /home/SFTP/%u to ChrootDirectory /home/chroot/%u
I also had to change the passwd file for this user from /home/SFTP/sftptest to /home/sftptest
The biggest change i had make was however the dir structure.
I had /home/SFTP/sftptest for the user dir. but changed it as follows:
The permission per level are as follows:
drwx------. 4 root root 4096 Dec 16 10:02 home
drwx------. 3 root root 4096 Dec 16 09:58 chroot
drwxr-x---. 3 root sftponly 4096 Dec 16 09:59 sftptest
drwxr-xr-x. 3 root root 4096 Dec 16 09:59 home
drwxrwx---. 3 sftptest sftptest 4096 Dec 16 10:29 sftptest
Once all of these changes have been made it is working as expected and one can now continue to customise the directories as required.
Hope this helps someone else.