Britain is increasingly becoming a nation of renters rather than home owners, Paragon Group’s boss told City A.M. yesterday.
The lender increased its buy-to-let mortgage loans by more than 80 per cent this year, as homes become increasingly unaffordable.
On top of sharp price rises in London, the mortgage market review (MMR) rules put in place in the spring have forced buyers to pass tougher affordability tests, again reducing their ability to buy houses.
“The UK is in the middle of a structural change in its housing market – it has been running for some time, and has further to go,” Paragon’s chief executive Nigel Terrington told City A.M.
“MMR has made it more difficult to get a mortgage so the mainstream market is weaker and demand for rental property has continued to rise.”
He pointed to forecasts from estate agency Savills, which predicted private rental’s share of the housing market would grow from 20 per cent to 24 per cent over the next five years.
London already has more renters than England and Wales as a whole at 30 per cent, and the sector is expected to reach 36 per cent by 2019.
Paragon’s buy-to-let completions came in at £656.6m in the 12 months to 30 September, up 83.5 per cent on the year.
Such rapid growth helped to push its pre-tax profits up 17.2 per cent to £122.8m. It has started taking deposits since the summer, after receiving a banking licence. In the few months since then it has raised £60.1m in retail deposits.