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Professional landlords increasingly comprise the core investors in the PRS

Paragon revealed a sharp increase in specialist landlord business, up from 79% to 89% of buy-to-let mortgage completions as it reported full year results today.

Specialist business also increased from 88% to 91% of the buy-to-let pipeline, as Paragon’s strategy of focusing on landlords operating in corporate structures and with larger portfolios delivered positive results.

Buy-to-let lending overall was stable year-on-year at £1.480 billion compared to £1.495 billion in 2018, with a 17% increase in the pipeline of business in progress at year end to £912 million.

John Heron, Managing Director of Mortgages at Paragon, said:

“Paragon’s deep expertise in buy-to-let means we are now one of a small number of specialist lenders offering solutions for the more complex requirements of the professional portfolio landlord community..

“Following tax and regulatory changes, professional landlords increasingly comprise the core investors in the UK’s private rented sector and we continue to support them and our intermediaries with enhanced service and tailored products specially designed to meet their needs.”

“Paragon’s results show a 9% increase in total new lending across the Group to £2.5 billion, along with an expansion in the net interest margin to 2.29% (2018: 2.21%) and a 5% increase in underlying profit before tax to £164 million (2018: £157 million)”

Source: Property 118

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Professional landlords drive BTL lending

Paragon Banking Group reported another quarter of strong growth. The latest update shows a total of £1.90 billion of new lending across all business lines in the nine months to 30 June 2019. This represents a 20% increase on the previous year. Within this total, Paragon’s mortgage lending grew from £1.13 billion to £1.19 billion.

Paragon’s specialist focus on professional landlords enabled it to increase its share of the market, with 89% of completions being from complex landlords, compared to 76% in 2018.

It was a particularly strong quarter for buy-to-let, with the new business pipeline reaching £733 million, up from £711 million in the previous quarter. Annualised buy-to-let redemptions continue to be encouraging at 8.6%, down 2.1 percentage points from the previous year.

John Heron, Managing Director of Mortgages at Paragon, said:

“Paragon is performing well. We have delivered strong new lending across all our business lines and the buy-to-let pipeline has grown despite the uncertain economic backdrop. We’re confident of meeting our objectives for the year as we continue to focus on the needs of larger, more complex and specialist landlords.”

Paragon’s Commercial Lending division, which includes development finance, has grown its new lending to £0.71 billion, up 58% from the previous year.

This growth reflects Paragon’s commitment to supporting more British SMEs in specialist lending markets.

Paragon has continued to strengthen its asset finance and development finance divisions. The development finance business has enhanced its product range following the acquisition of Titlestone Property Finance last year. Since then, Paragon has funded multiple projects in the South-East of England and has revealed plans to expand its services to small and medium sized property developers throughout the UK.

The above is an example of how the market is switching from small nonporfolio BTL borrowers to the larger professional landlords and borrowing in Ltd companies especially.

Source: Property118

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Professional landlords call for manual underwriting process

Over a third of property investors want buy-to-let lenders to apply a manual underwriting process for professional landlords, as they struggle to obtain buy-to-let mortgages off the high street, MT Finance’s has found.

The lender’s Property Investor Survey showed almost half (42%) of property investors said they had struggled to secure a mainstream buy-to-let mortgage in the last 12 months, with 54% citing affordability criteria as the primary barrier to mainstream funding.

Gareth Lewis, commercial director at MT Finance, said: “The results from our Q1 2019 Property Investor Survey reflects the impact of stricter affordability and stress testing from high-street lenders on professional property investors’ ability to obtain mainstream funding.

“The need for reliable, transparent, and quick access to funds is ever-critical and specialist finance- such as bridging loans, will continue to pick up when a more personalised approach to underwriting is required.

“With highly professional specialist lenders offering flexible products at competitive rates, bridging finance has become an attractive proposition to those property investors who are looking to expand their portfolio and need certainty when conducting their business and who often need to move swiftly to capitalise on an opportunity.”

This was followed by age restrictions at 32% and insufficient deposit capital at 14%.

Yet, 46% of those unable to obtain a buy-to-let mortgage filled the funding gap with other sources of liquidity, as 50% of those opted for bridging loans, 34% refinanced through a specialist buy-to-let lender, and 16% opted for a secured loan.

As a result, 58% of the 125 property investors surveyed did not think buy-to-let lenders are doing enough to support them.

When asked what mainstream buy-to-let lenders could do to better support them, 36% said applying a manual underwriting process for professional landlords would better support them, followed by increasing LTV thresholds at 32% and relaxing age restrictions at 26%.

By Michael Lloyd

Source: Mortgage Introducer