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Buy-to-let boom on way as Brits bet on soaring house prices

·2-min read
 (PA)
(PA)

BRITAIN is on the cusp of a new buy-to-let boom, the latest figures from Paragon Bank suggest, as housing entrepreneurs gear up to cash in on soaring house prices.

The specialist lender has £927 million worth of loans ready to go, mostly to professional buy-to-let business people.

Chief executive Nigel Terrington says the rented housing market is going to get bigger, perhaps because some families cannot get on the housing ladder.

“There are a lot more families renting property than there ever was in the past,” he said. “There is a bit of a culture in the UK which is our job in life is to grow up, get married and buy a house. That is changing. We don’t have to buy a car or a phone, we can lease them. Housing is the same.”

Paragon profits in the half-year jumped 45% to £83 million, there is an interim divi of 7.2p and share buybacks of £40 million are just announced.

All of which made Paragon shares the biggest riser on the FTSE 250, up 33p to 546p.

Rob Murphy at Edison Group said: “Paragon Banking Group’s half-year results hit record highs as the easing of lockdown restrictions helped to boost consumer confidence.”

Paragon is on the cusp on moving into new offices in the Walkie-Talkie tower on Fenchurch Street and reckons there is a general shift back to London in general.

“There has been a lot of talk about London rents being very soft, but what we have seen lately is an uptick of demand in London,” said Terrington. Paragon will embrace a “hybrid” model in future, with staff part working from home and part using offices.

Bad debts are down from £30 million to £6 million.

Recent figurers have the housing market rising at 10% a year, as Brits chase bigger houses in what has been dubbed a “race for space”.

In his statement to the City, Terrington said: "I am incredibly proud of these results. They reflect the hard work of our people during a challenging period as well as the success of our longstanding strategy to build a technology-enabled specialist banking group. We have delivered record half-year profits and go into the second half of 2021 with strong momentum, healthy new business pipelines and enhanced margins.

Our people continue to excel, maintaining both productivity and flexibility as we look to develop options for the future operating model of the Group. We look forward to the second half with strong capital ratios, prudent liquidity and with growing confidence as the UK emerges from the Covid crisis."

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