Paragon Bank is celebrating three decades since it entered the private rental sector, marking the 30th anniversary of its first mortgage product for landlords — launched a year before the term ‘buy-to-let’ entered the financial lexicon.
The inaugural loan, written in 1995, was for £31,150 at 70% loan-to-value on a £45,000 property. It marked the beginning of Paragon’s long-standing role in shaping and supporting the UK’s buy-to-let market, which has since grown to a £300 billion industry spanning two million loans.
John Heron, a long-serving figure in the mortgage industry, headed the new initiative and led Paragon’s mortgage division until his retirement in 2019. Since that first transaction, the bank has supported more than 300,000 landlord customers and written over 240,000 mortgages, with a total value of around £33 billion.
In 1996, Paragon joined a small group of early adopters, including ARLA — now Propertymark — and key specialist intermediaries, to launch the term ‘buy-to-let’. The move responded to a growing need for a stronger, more balanced housing market and a sustainable rental sector in post-recession Britain.
Reflecting on the bank’s role in shaping the sector, Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Buy-to-let is in our DNA, launching our first landlord mortgage a year before the term was even invented.
“We pioneered buy-to-let in the UK and our landlord customers have provided a home to millions of tenants over the last three decades.
“As we all know, the market has changed significantly in the 30 years since we wrote our first landlord mortgage. We’ve changed with it, gaining in-depth knowledge, expertise and experience and building a reputation for one of the leading specialist lenders.”
Paragon reports that buy-to-let lending has consistently demonstrated robust credit performance, with arrears outperforming the owner-occupier sector in 24 of the past 25 years. From its origins as a niche proposition, the product has matured into a fundamental part of the UK housing landscape.
The lender has built particular expertise in supporting landlords with large-scale portfolios, limited company structures and more complex properties, such as HMOs. In recent years, it has also made moves to streamline the application process and widen access to smaller landlords seeking to grow their holdings.
Sedgwick noted that recent enhancements to the bank’s application system were designed to improve the broker experience, as part of a broader digital transformation.
“This forms part of a company-wide digitisation programme and supports our diversification strategy which sees us support a broader spectrum of landlords – big and small, old and new – to invest in much needed homes for renters,” she said.
ORIGIN STORY
Russell Anderson, commercial director of mortgages, said the origins of buy-to-let can be traced to a time when the UK was emerging from a deep recession, prompting fresh demand for housing options beyond ownership.
“Looking back to the mid-90s, the UK was just emerging out of a deep recession that highlighted the need for a housing tenure that provided a home for those who didn’t want to or couldn’t buy a home,” he said.
“We saw the market opportunity presented by what we know now as buy-to-let mortgages, but at that point didn’t have a collective name. It was hugely exciting and we quickly recognised that we had tapped into a high growth sector.”
He added that the enduring strength of the buy-to-let market lies in its ability to deliver reliable income and adapt to shifting economic and regulatory conditions. “Buy-to-let is now a mature, seasoned product that has proven its resilience through many economic cycles, as well as significant regulatory change,” Anderson said.
“This strong credit performance is underpinned by demand for good quality, flexible homes, something that will continue as the population grows.”
