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News releases

25 Years of Buy-to-Let

  • Buy-to-let officially launched as a mortgage product 25 years ago
  • Buy-to-let lending has helped to transform the private rented sector since the 1990s
  • The UK private rented sector is now home to approximately 5 million people, provided by over 2 million landlords

Today, Friday 24 September 2021, marks the 25th anniversary of the inception of buy-to-let mortgages, which were officially launched as a finance product in 1996.


Read our report on the evolution and impact of buy-to-let


Twenty-five years ago, and the year is 1996; John Major leads a Conservative Government, Princess Diana and Prince Charles controversially divorce and British beef is banned across Europe as ‘mad cow disease’ hits the headlines. In music, the Spice Girls’ debut single ‘Wannabe’ shares chart success with ‘Three Lions (Football’s Coming Home)’ after the song - still sung to this day - was originally released to cheer on England, hosting the European Football Championships.

Alongside these high-profile events, the Association of Residential Landlords (ARLA) was working with a small group of lenders, including Paragon, to develop a mortgage product specifically tailored to landlords. In doing this, they sought to facilitate and encourage investment needed to respond to growing tenant demand and a critical shortage of homes in the recession-hit UK housing market.

Richard Rowntree, Paragon Managing Director for Mortgages, said:

“Since being launched as a mortgage product specifically designed for landlords 25 years ago, buy-to-let finance has helped to transform the PRS.

“The PRS is now a vital component of the UK’s housing provision, with renting no longer a last resort. The PRS is a tenure of choice as well as need and this is supported by the diversity of those who actively choose rented homes, benefitting from the flexibility they provide.”

Robert Jordan, ARLA Propertymark Past President commented:

“We at ARLA realised that the housing market was in a low ebb; houses weren’t selling, which meant a lot of people were letting their homes to move to a new property. When the housing market picked up those properties sold and there was a need for more rented properties to fill the gap for tenants, but we couldn’t see where we would find more homes to let.

“It became clear that the mortgage options weren’t suitable, so together we designed a product, buy-to-let, that would enable more investors to purchase an investment property and let it under the new Housing Act 1988 regulations.

“Paragon and NatWest were the first two mortgage lenders we approached. Today, private landlords house approximately five million households across the UK at no cost to the exchequer."

In the 25 years since, the buy-to-let market has advanced a great deal, helping the UK’s private rented sector (PRS) expand and improve substantially.

The PRS has almost doubled in size, expanding from 2.4 million households in 1996 to 4.4 million in England today, accounting for 19% of UK households, up from 10% recorded in 2001, and is now above the provision of social housing at 17%.

After this period of rapid early growth, subsequent recovery from the global financial crisis and the abandonment of the Government’s tenure neutral policy, we now see a PRS that offers tenants more choice with homes that are bigger, better and more energy efficient.

The portion of homes in the sector classed as ‘decent’ under Government standards has consistently increased, rising from 53.2% in 2006 to 76.7% last year. There has been a 272% increase in PRS homes with an energy rating of C or above since 2009 to 1.8 million today.