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Let to buy booms ahead of looming red tape

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  • 04/02/2016
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Let to buy booms ahead of looming red tape
The number of let-to-buy cases being handled by brokers is booming, with the sector accounting for one in eight mortgages in the final quarter of 2015, according to a study by Paragon Mortgages.

The specialist lender found that for 10% of mortgage advisers, let-to-buy deals represented more than 30% of their business.

It also revealed that in the fourth quarter of 2015, 12% of mortgage cases were let to buy. This figure is up from 10.6% in quarter three.

Many let-to-buy mortgages – which enable a borrower to let their existing home in order to raise funds to buy a new home for themselves – are set to fall under statutory regulation in March, when the Mortgage Credit Directive is implemented.

They will be caught under a new regulatory category of consumer buy to let, which will include loans where a customer has no other rental properties, and is looking to remortgage a property they have previously lived in.

Six in 10 brokers told Paragon that they expected the new rules to have no impact on levels of let-to-buy business, while a quarter thought it would lead to fewer mortgages being arranged.

John Heron, director of mortgages, said: “We have seen a clear uptick in the volume of let-to-buy mortgages being written in Q4 2015.

“Paragon has been working hard to ensure we are prepared for this regulatory change, so that we can continue to offer a comprehensive range of mortgage solutions for buy-to-let landlords.”

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