Thirty years after the launch of the UK’s first buy-to-let mortgage products, letting agents’ trade body Propertymark is celebrating the role the sector has played in supporting investment in private rented homes and recognising the people and organisations who helped make the concept a reality.

Buy-to-let was launched to the public in October 1996, assisted by the Association of Residential Letting Agents (ARLA), now known as ARLA Propertymark. 

The concept was developed through collaboration between ARLA, its members and established UK banks and mortgage lenders, with the aim of creating a mortgage product specifically designed around the needs of landlords and the income generated by rented property.

At launch, eight mortgage lenders formed the original buy-to-let panel. The number of buy-to-let mortgage products available through ARLA grew rapidly, reaching more than 300 by the end of the scheme’s fourth year.

The launch came at a time when the housing market was recovering from recession, demand for privately rented homes was increasing, and traditional residential and commercial mortgage products were poorly suited to individual landlords. ARLA recognised that a new approach to finance was needed to encourage investment and help increase the supply of homes available to rent.

Nathan Emerson, chief executive of Propertymark, comments: “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.

“The anniversary is therefore not just an opportunity to look back. It is a reminder that constructive collaboration between the property profession, lenders and policymakers can deliver lasting change.”

Paragon was also involved from the beginning. The bank wrote its first mortgage for a landlord in 1995, a year before the term buy-to-let was formally adopted.

Louisa Sedgwick, managing director of mortgages at Paragon Bank and a regular contributor to Landlord Today, adds: “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 market has changed enormously since 1996, but the underlying principle remains just as important. 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.”

Propertymark says the impact of the original initiative became clear within just a few years. 

By the end of the fifth year of buy-to-let, more than three million rental properties had been offered by ARLA letting agent members across the UK and sold to more than 2.5 million new investors and landlords.

The concept continued to flourish over the following three decades and has become an established part of the UK housing market, playing a crucial role in providing homes for people who rent.

Andrew Reeves, founder and managing director of Andrew Reeves Estate Agents Ltd, joined the national council of ARLA in the early 1990s and says now: “Buy-to-Let gave letting agents, landlords and renters a practical way forward. It recognised that a property being bought as an investment was different to a home being bought for occupation, while the new keener “Buy-to- Let” mortgage rate was central to understanding the investment.

“Developing the scheme was a real collaborative effort. We spent many months talking through the practicalities with banks and mortgage lenders, as well as with would-be new landlords and their future renters. We realised that both parties needed advice from well-informed ARLA letting and managing agents and what a mortgage product designed specifically for the rental market needed to look like.

“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.

“None of us could have known in early 1996 just how significant the idea would become. The concept continued to flourish over the following three decades and has since become a crucial part of the housing market. It is enormously satisfying to look back and see that an idea developed through collaboration across the industry has had such a lasting and ongoing impact.”

Today’s private rental sector is hugely different and, to many, under siege.

Propertymark’s latest market analysis shows that rental supply remains a key concern. The organisation says professional agents have an important role to play in helping landlords understand their responsibilities and operate successfully in an increasingly complex market.

Recent research shows that more than 834,000 homes have left the UK private rented sector over the past decade, while new rental supply is increasingly being influenced by Build to Rent.