One of Britain’s best known and highest profile buy to let specialist lenders says the number of new BTL mortgages being taken out has dropped since a raft of new restrictions and regulations were introduced by the government.
Paragon Banking says that although its own business has grown in the past year, the issue of mortgage interest tax relief reductions introduced by the government for landlords has had a particularly damaging effect on the wider BTL mortgage market.
“It is the amateur landlords – those with fewer than four properties – who have been moving away from the market, leading to a fall in the volume of buy to let transactions which seems to be establishing a new ‘normal’ level” says the group’s annual report, presented to shareholders this week.
The Prudential Regulation Authority’s changes last year to the UK’s lending rules for so-called portfolio landlords – those with more than four properties – has also hit the BTL sector says Paragon.
Paragon says that despite the challenging landscape of buy to let, it has enjoyed a modest profit rise of just 1.1 per cent from £143.2m to £144.8m, and it believes overall demand for BTL mortgage products is likely to remain strong for the foreseeable future.
“Against this backdrop the group’s performance has been strong, with its 20-year experience of servicing the complex needs of professional landlords differentiating it from other lenders and allowing the business to make market share gains during the year” says chief executive Nigel Terrington.