Propertymark is marking 30 years of buy-to-let mortgages and recognising the people and organisations who helped launch a product built around private landlords.
Buy-to-let launched to the public in October 1996, after several years of work by the Association of Residential Letting Agents (ARLA), now known as ARLA Propertymark. ARLA developed the concept with its members and established UK banks and mortgage lenders. The aim was a mortgage designed around landlords’ needs and the income that rented property generates.
Eight lenders formed the original buy-to-let panel, and the number of buy-to-let mortgage products available through ARLA grew to more than 300 by the end of the scheme’s fourth year. The launch came as the housing market was recovering from recession and demand for privately rented homes was rising.
Traditional residential and commercial mortgage products suited individual landlords poorly, and ARLA concluded that a new approach to finance would encourage investment and increase the supply of homes to rent.
“The creation of buy-to-let was a landmark moment for the private rented sector,” said Nathan Emerson, chief executive of Propertymark. “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 Bank was also involved from the beginning. It wrote 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,” noted Louisa Sedgwick, managing director of mortgages at Paragon Bank.
“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.”
Growth since launch
The impact became visible within a few years. By the end of the fifth year, ARLA letting agent members across the UK had offered more than three million rental properties, sold to more than 2.5 million new investors and landlords. The concept has since become an established part of the UK housing market.
Andrew Reeves, founder and managing director of Andrew Reeves Estate Agents Ltd, was at the heart of the initiative. He joined the National Council of ARLA in the early 1990s as chairman of its marketing committee and later formed its Buy-to-Let Committee. Over many months, Reeves and his colleagues developed the concept in detailed discussions with established UK banks and mortgage lenders, and brought the buy-to-let scheme to the public in October 1996.
“Looking back over 30 years, what stands out is how simple the original concept was,” explained Reeves. “In the early days, there was existing demand from people who wanted to both let (as landlords) and rent (as renters), but the finance available to both had not caught up with the changing housing market.
“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.”
Pressures on landlords today
Landlords and agents are now dealing with:
- higher financing costs
- changing tax treatment
- increased regulation
- the implementation of major tenancy reforms
Propertymark’s latest market analysis shows that rental supply remains a key concern. The organisation says professional agents can help landlords understand their responsibilities and operate in an increasingly complex market.
More than 834,000 homes have left the UK private rented sector over the past decade, recent research shows, while Build to Rent increasingly influences new rental supply. Propertymark continues to highlight the importance of supporting responsible landlords who provide quality homes through the traditional private rented sector.
