The UK buy-to-let market has grown to almost two million outstanding mortgages worth £311.6bn, 30 years after the first products carrying the buy-to-let name were launched.

September 1996 marked the public launch of buy-to-let at a press conference at London’s RAC Club, with the first mortgages available under the banner from October that year.

Paragon, one of the original panel lenders involved in the launch, has published a report examining the development of the market over the past three decades.

Its analysis shows there are now 1.92 million outstanding buy-to-let loans with a total value of £311.6bn. Annual lending reached £40.3bn during 2025, while buy-to-let represents around a fifth of outstanding mortgage balances.

Over the same period, England’s private rented sector has expanded from fewer than two million households to almost five million, representing close to one in five households.

Buy-to-let emerged from collaboration between the Association of Residential Letting Agents, now Propertymark, and a group of lenders including Paragon. The initiative was intended to address growing demand for rented housing while providing landlords with mortgages designed specifically for residential investment.

John Heron, former executive director at Paragon and one of those involved in the creation of buy-to-let, said: “Demand for rented homes was growing, but landlords lacked access to finance designed around residential lettings.

“Buy-to-let was created to solve that problem and bridge that gap, encouraging investment into the private rented sector and helping to increase housing supply at a time when it was badly needed.

“The idea was straightforward. If owner-occupiers had mortgage products tailored to their needs, landlords should too.

“What followed was a lending framework that took into account different facets of lettings business and the people that operated them and created a more practical route for investors to provide privately rented homes.”

MARKET WEATHERS THREE DECADES OF CHANGE

Since its launch, the sector has passed through the global financial crisis, substantial changes to landlord taxation and regulation, the Covid-19 pandemic and the more recent period of higher inflation and borrowing costs.

Paragon said landlords had increasingly responded by treating property investment as a business, with greater emphasis on portfolio management, ownership structures and long-term planning.

The lender’s analysis also points to the credit performance of buy-to-let lending. It said the proportion of buy-to-let mortgages in arrears had been lower than for owner-occupier mortgages in every year since comparable records began, with the exception of one year.

Louisa Sedgwick (pictured), managing director of mortgages at Paragon Bank, said: “Paragon’s analysis shows just how much the market has evolved over the past three decades.

“Landlords have adapted to changing economic conditions, taxation and regulation, becoming increasingly strategic in the way they manage their portfolios and approach long-term investment.

“Many landlords now operate their portfolios as businesses, taking a long-term view of investment and responding to changing tenant expectations, housing standards and regulation. The result is a market that is more professional and commercially focused than when buy-to-let first emerged.”

Paragon’s report also highlights changes in housing standards across the private rented sector, including a more than halving in the proportion of non-decent homes over the past two decades and improvements in energy efficiency.

Nathan Emerson, chief executive of Propertymark, said: “The creation of buy-to-let showed what can be achieved when different parts of the housing industry work together.

“Letting agents were seeing first-hand the growing demand for rented homes and the challenges landlords faced accessing finance that reflected the realities of residential letting.

“Working alongside lenders including Paragon, ARLA helped develop a framework that encouraged investment into the private rented sector and increased the supply of homes available to rent. 30 years on, that spirit of collaboration remains just as important.”

Remortgaging now accounts for the majority of buy-to-let lending activity, according to the report, reflecting the growing role of experienced landlords managing established portfolios rather than investors purchasing individual properties.

Nigel Terrington, chief executive officer of Paragon Banking Group, said: “Buy-to-let is part of Paragon’s DNA. We were involved at the inception of the market and have supported landlords through every stage of its development over the past three decades.

“The needs of landlords today are very different from those of the mid-1990s. As the market has evolved, we’ve evolved with it, continuing to invest in specialist expertise, develop our lending and adapt our support to meet the changing needs of landlords and brokers.

“Our commitment remains the same as it was 30 years ago, helping responsible landlords invest in and provide good-quality rented homes.”