MortgagesJul 29 2016

Paragon sees ‘wealth of opportunities’ in BTL sector

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Paragon sees ‘wealth of opportunities’ in BTL sector

Paragon Group has reported underlying operating profits of £109.9m for the last nine months, 12 per cent higher than the £98m made during the corresponding period in the previous year.

After £2.8m incurred in connection with the group’s acquisition of the Five Arrows Leasing Group in November, along with a fair value charge of £800,000, pre-tax profit was £106.3m for the period.

Buy-to-let lending from 1 October to 30 June was £989.6m, 21 per cent higher than £816.5m for the corresponding period in 2015.

As part of the group’s diversification strategy, 45.7 per cent of this buy-to-let lending was funded through retail deposits, compared with 22.8 per cent at 30 June 2015.

As expected, new lending levels slowed during the third quarter to £166m, following disruptions to the market caused by the combination of stamp duty changes and uncertainty in the run up to the referendum, the results noted.

“The group continues to maintain a disciplined approach to pricing and credit, including having taken an early decision to raise minimum affordability tests in January to reflect future landlord tax relief changes,” the document read.

The deal pipeline at 30 June stood at £339m, compared to £350.6m at the start of the quarter.

Paragon Mortgages’ director John Heron said he continues to see a wealth of opportunities in the buy-to-let sector. “With tenant demand for quality, privately rented housing remaining high, private landlords will be the driving force behind trying to meeting this growing demand.”

The company’s house view is a number of regulatory and fiscal changes, whilst dampening the rate of growth of the buy-to-let market, will create opportunities for market share gains for specialist lenders.

The group therefore expects to deliver profits for the 2016 financial year in line with management’s expectations.

peter.walker@ft.com