Paragon reopens its doors as rental market booms
The poster boys of the buy-to-let home-loans industry said yesterday that they were open for business again, after more than two years without lending a penny.
The specialist lender Paragon nearly went under during the financial crisis and has been sitting on its heels since, with the business kept ticking over by buying loan books and providing servicing for others. Yesterday, however, Paragon said it would start lending to new clients again "with immediate effect".
Chief executive Nigel Terrington said: "Demand for rental property has never been as strong. The supply of tenants is outstripping the supply of available homes." Mr Terrington put this down to a lack of council houses, increasing immigration and student numbers, and the unwillingness of banks to lend to first-time buyers on acceptable terms.
"The private rented sector is being required to supply all these markets," he said. Paragon has typically worked by arranging loans, packaging them up and selling them in the securitisation market to investors. This source of funding dried up during the financial crisis but Mr Terrington said it was reviving.
"We always thought that securitisation markets would come back, it was just a matter of time. Last week RBS got away a £4.7bn deal but it isn't just them," he said.
Paragon said it would continue to concentrate on "professional landlords" – investors who run their property portfolios as businesses rather than as amateurs who are forced to become landlords through being unable to sell their properties.
David Salusbury, the chairman of the National Landlords Association, described the return as "good news" but said: "We hope this will not be negated by the anticipated cuts to housing benefit, which could adversely affect investment in housing for rent and the supply of affordable accommodation." The shares finished up 5.8p at 169.1p.
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