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

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 Duty These 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,…