Landlords still need mortgage funding support

Nigel Terrington, chief executive of The Paragon Group of Companies, comments on latest buy-to-let lending and arrears figures from the Council of Mortgage Lenders: ‘Today's arrears figures demonstrate the robust credit quality of buy-to-let lending and the strong performance of landlords, even in a recessionary environment. The overwhelming majority of landlords are experiencing growing levels of tenant demand for their properties, which is reflected in low void periods and healthy yield returns. Paragon's own arrears level is significantly below that of both the buy-to-let and wider mortgage market.

‘However, in this environment landlords want to expand their portfolios but are being prevented from doing so by a lack of mortgage finance, as the CML's depressed lending figures highlight. The buy-to-let market has traditionally been served by non-deposit taking financial institutions, but these lenders have found it difficult to write new business since the start of the credit crunch due to the closure of the wholesale funding markets. It is essential that the Government takes more action to enable the securitisation markets to recover to achieve a healthy and vibrant mortgage market.

‘If lending activity in the sector continues to be weak, there is a real danger that we could see a contraction in the number of properties in the private rented sector. This would be detrimental to the UK housing market and is likely to result in rental inflation and people being priced out of rented accommodation.'