A new approach to financing rented homes
The idea emerged as the housing market recovered from recession and demand for privately rented homes increased. Traditional residential and commercial mortgages were poorly suited to individual landlords, creating a need for a different approach.
ARLA recognised that a mortgage designed for rental investment could help landlords enter the market and increase the supply of homes available to rent. Eight lenders formed the original buy-to-let panel. By the end of the scheme’s fourth year, more than 300 mortgage products were available through ARLA.
Paragon was involved from the beginning, writing its first mortgage for a landlord in 1995, a year before the term buy-to-let was formally adopted.
Thirty years ago, buy-to-let was a new idea designed to solve a very practical problem: how to give landlords access to finance that reflected the realities of renting out property.
Paragon was proud to be one of the lenders working alongside ARLA (Propertymark) and the wider industry to turn that idea into a viable mortgage product.
The agents behind the idea
Andrew Reeves, founder and managing director of Andrew Reeves Estate Agents Ltd, was central to the initiative. Having joined ARLA’s National Council in the early 1990s as Chairman of its Marketing Committee, he went on to form its Buy-to-Let Committee. Over many months, the committee worked through the concept with banks and mortgage lenders, helping bring the scheme to the public in October 1996.
The work drew on letting agents’ understanding of landlords and renters, alongside lenders’ expertise in creating a suitable financial product. Professional advice from informed letting and managing agents was an important part of the approach.
What was particularly encouraging was the way the idea brought different parts of the industry together around a common objective.
Letting agents understood the needs of landlords and renters, while lenders brought the expertise needed to turn the concept into a workable and affordable financial product.
Supporting investment in a changing sector
The private rented sector now faces a different set of pressures. Landlords and agents are navigating higher financing costs, changes to tax treatment, increased regulation and major tenancy reforms.
Rental supply remains a key concern in our market analysis. Professional agents play an important role in helping landlords understand their responsibilities and manage their properties successfully as requirements change.
We continue to highlight the need to support responsible landlords who provide quality homes. As Build to Rent influences new rental supply, investment through the traditional private rented sector remains important.
The creation of buy-to-let was a landmark moment for the private rented sector. It demonstrated what can happen when agents, lenders and the wider industry work together to solve a real housing problem.
Thirty years later, the challenges facing the sector are different, but the fundamental need for sufficient, good-quality rental homes has not changed. Supporting responsible landlords and professional agents must remain central to housing policy if we are to maintain choice for renters.
Looking ahead to the next 30 years
This anniversary recognises the contribution of the agents and lenders who developed buy-to-let, while looking ahead to what landlords and renters need from the sector.
For Paragon, that means continuing to support property investment. Louisa added, “A healthy private rented sector needs responsible landlords, professional agents and lenders that understand the particular requirements of property investment. We are proud of the role Paragon has played over the past three decades and remain committed to supporting the sector for the next generation.”
