Slim rise in full-year pre-tax profit
British lender Paragon Banking Group has recorded a slim 1.1 per cent rise in full-year pre-tax profit.
According to Reuters, Paragon said its focus on professional landlords helped to drive a surge in its buy-to-let business even as tax and regulatory changes made the property market tougher for smaller investors.
Buy-to-let is a form of residential investment in which one buys a property, typically with a mortgage, with the view of renting it out.
Paragon said 71 per cent of applications in its core buy-to-let business were from professionals as of the end of September, rather than people renting out one or two properties.
Traditionally, 90 per cent of buy-to-let market in the UK was owned by amateur investors. However, a string of tax and regulatory changes announced last year has made the sector less attractive to such “dinner party” landlords, allowing larger institutions to grab market share.
“These changes disrupted the level of market activity during the year, dampening demand in the sector at an aggregate level. Against this backdrop the group’s performance has been strong,” Paragon said.
Overall lending in the wider buy-to-let market has reduced from about £40bn to about £35bn this year, CEO Nigel Terrington told Reuters.
“While the wider market is weaker, our market share is stronger… in the areas that produce the better customers, who are able to deliver enhanced margins and stronger relationships,” Terrington added.