A series of fiscal and regulatory changes aimed at private landlords and challenging lending conditions are taking their toll on the buy-to-let market.
There has been a notable slowdown in the number of landlords acquiring properties for investment purposes, according to Paragon.
The challenger bank, which specialises in lending to landlords, has reported just a marginal increase in profits, owed in part to weaker demand from buy-to-let investors.
It noted that there was “dampening demand in the sector” this year, as tax and regulatory changes made the property market tougher for smaller investors.
Paragon said that it has had little alternative but to focus on professional landlords to help support growth in its buy-to-let business.
Paragon said 71% of applications in its core buy-to-let business were from professionals as of the end of September, rather than amateur investors renting out a couple of properties.
A number of tax and regulatory changes over the past 18 months or so have deterred small-scale landlords, enabling larger institutions to increase market share.
“These changes disrupted the level of market activity during the year, dampening demand in the sector at an aggregate level. Against this backdrop the group’s performance has been strong,” Paragon said in a statement.