The Government must extend financial support to specialist buy-to-let lenders or risk crippling the UK’s army of private landlords, the head of Paragon warned yesterday.

State rescue packages for Britain’s banks, such as the credit guarantee scheme, are available only to deposit-taking institutions and barred to lenders that are exclusively wholesale funded. Nigel Terrington, Paragon’s chief executive, said: 'As a consequence, the effect in buy-to-let has been disproportionate.'

He claimed that 'according to independent research, available loan products have reduced by 95% during the last two years' despite the fact that 'demand for private rented property remains strong'.

Daily Telegraph