Specialist buy-to-let lender Paragon has posted a pre-tax profit of £29.3m for the six months to March 31 as the company continues to prepare to return to new lending.
Pre-tax profits are up 84.3% compared to the same period last year when profits were £15.9m.
Paragon says the results have been driven by the strong performance of its £8.5bn buy-to-let book.
Arrears across the portfolio stood at 1.17% as at the end of March against the Council of Mortgage Lenders’ buy-to-let industry average of 2.71%.
The number of properties in receivership has fallen to 1,602 as at March 31 from 1,945 as at September 30 2009.
John Heron, director of mortgages at Paragon, says: “We continue to prepare the business for the resumption of new lending.
“Conditions in the wholesale funding markets continue to improve and discussions are progressing with a number of parties to determine whether suitable financing arrangements can be agreed to support new lending.
“We hope to be able to update the market in due course, but as these discussions are still ongoing, we are unable to provide guidance over their timing or outcome.”
As Paragon continues to only offer new lending to existing borrowers, its buy-to-let book shrank to £8.46bn, down from £8.59bn at the end of September.
New buy-to-let lending to existing customers fell to £9.1m in March, compared to £25.2m in September and £10.7m in March 2009.
In its results Paragon says that the private rented sector has benefited from uncertainties in the housing market and in the economy.
The results say: “Looking forward, we expect interest rates to remain low for the foreseeable future and for the performance of the book to remain resilient when rates eventually increase.
“Strong rental demand is expected to continue to underpin borrower incomes and support the credit performance of the group’s buy-to-let portfolio, bolstering landlords’ motivation to maintain and grow their letting businesses.”