A former president of the Association of Residential Letting Agents has lifted the lid on how buy to let came about, 25 years ago in 1996.
“We at ARLA realised that the housing market was in a low ebb; houses weren’t selling, which meant a lot of people were letting their homes to move to a new property. When the housing market picked up those properties sold and there was a need for more rented properties to fill the gap for tenants, but we couldn’t see where we would find more homes to let” explains Robert Jordan.
“It became clear that the mortgage options weren’t suitable, so together we designed a product, buy to let, that would enable more investors to purchase an investment property and let it under the new Housing Act 1988 regulations.
“Paragon and NatWest were the first two mortgage lenders we approached. Today, private landlords house approximately five million households across the UK at no cost to the exchequer."
An analysis by Paragon shows that in the 25 years since, the buy to let market almost doubled in size, expanding from 2.4m households in 1996 to 4.4m in England today, accounting for 19 per cent of UK households, up from 10 per cent recorded in 2001, and is now above the provision of social housing at 17 per cent.
Richard Rowntree, the current Paragon managing director for mortgages, says: “Since being launched as a mortgage product specifically designed for landlords 25 years ago, buy-to-let finance has helped to transform the PRS.
“The private rental sector is now a vital component of the UK’s housing provision, with rentingno longer a last resort. The PRS is a tenure of choice as well as need and this is supported by the diversity of those who actively choose rented homes, benefitting from the flexibility they provide.”
For agents wanting to place what life was like 25 years ago, John Major was leading a Conservative government, Princess Diana and Prince Charles controversially divorced and British beef was banned across Europe as ‘mad cow disease’ hit the headlines.
In music, the Spice Girls’ debut single ‘Wannabe’ shared chart success with ‘Three Lions (Football’s Coming Home)’ after the song - still sung to this day - was originally released to cheer on England, then hosting the European Football Championships.