Buy-to-let damaged by govt’s tax and mortgage changes, says leading lender

first_imgHome » News » Buy-to-let damaged by govt’s tax and mortgage changes, says leading lender previous nextBuy-to-let damaged by govt’s tax and mortgage changes, says leading lenderParagon reveals the number of mortgage being taken out has dropped since new tax relief, Stamp Duty and mortgage underwriting rules were introduced recently.Nigel Lewis23rd November 20170954 Views The Prudential Regulation Authority’s changes last year to the UK’s lending rules for the buy-to-let sector have led to reduced activity in the market, leading lender Paragon has reported in its full-year accounts.Following a review of the buy-to-let market in 2015/2016, the PRA this year raised the standards it expects underwriters to apply to landlords taking out mortgages.This includes greater scrutiny of a landlord’s overall business financials, in particular for portfolio landlords with four or more properties.Paragon also says the additional Stamp Duty that is now paid by landlords buying properties, and the reduction is tax perks for the sector, also contributed to a bad year.Stamp DutyThese factors, the lender says, helped drive modest profits within its business over the past year, up from £143.2 to £144.8 million – a rise of just 1.1%.Paragon appears to suggest that the additional red tape has increased its costs, because its buy-to-lending increased by 20% to £1.39 billion last year.And depsite the “disruption” to the market in recent months, the lender says overall demand in Britain’s private rented sector is expected to continue for the “foreseeable future”.“Against this backdrop the Group’s performance has been strong, with its twenty-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 in his management report.But Paragon says it is the tax relief reductions introduced by the government for landlords which have had a more damaging influence on landlords than the extra 3% Stamp Duty they must now pay on property purchases.“It is the amateur landlords – those with fewer than four properties – who have been moving away from the market,” the report says, “leading to a fall in the volume of buy-to-let transactions which seems to be establishing a new ‘normal’ level.”nigel terrington landlords paragon PRA buy-to-let November 23, 2017Nigel LewisWhat’s your opinion? Cancel replyYou must be logged in to post a comment.Please note: This is a site for professional discussion. Comments will carry your full name and company.This site uses Akismet to reduce spam. Learn how your comment data is processed.Related articles BREAKING: Evictions paperwork must now include ‘breathing space’ scheme details30th April 2021 City dwellers most satisfied with where they live30th April 2021 Hong Kong remains most expensive city to rent with London in 4th place30th April 2021last_img

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