UK buy-to-let has delivered total returns of 2,130% since the launch of the first buy-to-let mortgage in September 1996, according to analysis from Hamptons.

Hamptons said £1 invested in the average UK buy-to-let property in late 1996 would have generated £22.30 in total returns by 2026, taking account of capital growth and net rental income after running costs.

That compares with £22.05 from the S&P 500, based on capital growth and reinvested dividends, £8.96 from the FTSE 100 and £7.36 from gold over the same period.

The estate agency said rental income has been the biggest contributor to landlord returns. Around 62% of total returns over the past 30 years came from rents paid by tenants, with the remaining 38% generated by rising property values.

Recent performance has been less favourable for buy-to-let investors, however. Hamptons said cumulative returns over the past five years stood at 41% for residential buy-to-let, compared with 75% for the S&P 500 and 73% for the FTSE 100.

LANDLORD PROFILE SHIFTS

The research also highlights how the profile and financing choices of landlords have changed since 1996.

The average landlord purchaser was aged 37 in 1996, compared with 51 today. The average property price has risen from £54,900 to £360,600, an increase of 557%.

Average deposits have remained relatively stable, falling from 29% of the purchase price to 27%, while average mortgage rates have dropped from 7.76% to 4.52%.

Mortgage structures have changed more sharply. In 1996, 88% of buy-to-let borrowers used repayment mortgages, compared with 30% today. Fixed-rate borrowing has moved in the opposite direction, rising from 26% of loans in 1996 to 99% in 2026.

Hamptons said the first generation of buy-to-let landlords was largely made up of homeowners in their 30s and early 40s looking to build long-term wealth through property.

Average UK house prices doubled between 1996 and 2002, helping early investors build equity and, in some cases, use that growth to expand their portfolios. Hamptons said loan-to-value ratios for early buyers more than halved within six years.

Today, higher property prices and larger absolute deposit requirements have increased barriers to entry, while landlords are also operating within a more heavily regulated and higher-tax environment.

Seven in 10 mortgaged buy-to-let purchases are now interest-only, according to the research, reflecting a greater focus on monthly cash flow and portfolio efficiency.

SECTOR BECOMES MORE PROFESSIONAL

Aneisha Beveridge, head of research at Hamptons, said: “When the buy-to-let mortgage was launched in 1996, few predicted it would become one of the largest wealth-creation engines of modern British history.

“It opened the door to a new breed of middle-class investor seeking bricks-and-mortar security when buying property outright was out of reach.

“While these investors were in their 30s back in the 1990s, many remain landlords in their 60s today.

“However, the profile of landlords has shifted over the course of a generation. What began as a relatively accessible investment for first-time landlords in their 30s has evolved into a more professionalised sector dominated by older, experienced investors.

“The number of younger landlords dabbling in buy-to-let on the side of a day job is increasingly rare.

“Today’s largest portfolios often started off life in the late 1990s and have accrued substantial equity through successive house price booms, creating equity which has often been reinvested.

“For a growing number of landlords, those properties are now part of a wider family business that is likely to be passed down to the next generation rather than being sold off in the face of rising tax rates.”