Britain's crackdown on buy-to-let landlords has helped drive up profits at OneSavings Bank as tighter rules put 'dinner party' landlords off the sector and drive up interest among bigger institutions.
The FTSE 250 lender said its profits for the six months to June 30 had risen 20pc to £78.4m on last year as fresh regulation and stamp duty changes pave the way for large-scale landlords to grab more market share.
"There's no doubt the buy-to-let market had become a bandwagon [for] anyone with a bit of cash," chief executive Andy Golding said. "I call those people 'dinner party landlords'; someone tells them it's a good idea so they go off and do it.
"But that's not our target market. We've always favoured people with multi properties and a track record with managing those properties."
The bank said its loan book grew 10pc to £6.5bn during the period, driven by a particularly strong increase in its core buy-to-let lending sub-segment as the market focuses on more experienced, professional landlords.
That stands in contrast to bigger buy-to-let lenders, who have been rattled by the chill in the market as activity among their customers plunges. Nationwide, for example, saw its profits covering April to June dip 20pc on a year ago as buy-to-let lending shrank by half.
Buy-to-let investors are usually non-professional landlords who buy properties and then rent them out, while the large landlords that OneSavings targets will have a portfolio of houses in the tens or hundreds.
Activity in the UK has stalled as an increase in stamp duty on additional properties, fresh tax relief changes and a fall in rents puts people off buying new property. Extra rules coming into force in October will likely 'professionalise' the market even further, OneSavings said.
While Mr Golding acknowledged that purchase demand could go down he said refinancing accounted for around 60pc of the group's business, suggesting it is luring customers from other lenders.
Its shares inched up more than 2pc on the results.