Report shows portfolio landlords now drive most lending activity
The UK buy-to-let sector has grown from a niche lending product into a £311.6 billion market over three decades, according to a new report from specialist lender Paragon, offering brokers a data-backed view of a sector regulators say remains more resilient than the wider mortgage market.
September 1996 marked the public launch of buy-to-let at a press conference at London's RAC Club, with the first products becoming available under the buy-to-let banner from October of that year. Paragon was among the first panel lenders to offer buy-to-let mortgages, and marked the anniversary by publishing "30 Years of Buy-to-Let," a report examining the product's evolution into what it calls a mature, proven asset class.
Loan book has nearly doubled since launch
According to Paragon's report, the market now comprises 1.92 million outstanding loans worth £311.6 billion, with annual lending reaching £40.3 billion in 2025, representing a fifth of total outstanding mortgage balances. The lender's analysis found that buy-to-let lending has funded a private rented sector that has grown from fewer than two million to almost five million households in England, accounting for nearly one in five homes.
Buy-to-let emerged from collaboration between the Association of Residential Letting Agents (ARLA), now Propertymark, and a handful of lenders including Paragon, at a time when demand for rented homes was growing but landlord finance remained limited. John Heron, Paragon's former executive director and one of the product's original architects, said: "Demand for rented homes was growing, but landlords lacked access to finance designed around residential lettings."
Paragon's analysis found that the proportion of buy-to-let mortgages in arrears has been lower than for owner-occupiers in every year since records began, bar one. Separate UK Finance figures for the fourth quarter of 2025 support that pattern, showing buy-to-let mortgages in arrears fell nine per cent from the previous quarter, with the overall proportion of buy-to-let mortgages in arrears at 0.5%.
Independent data backs credit performance claim
UK Finance figures for the first quarter of 2026 further reinforce Paragon's resilience claim. The number of buy-to-let fixed-rate mortgages outstanding stood at 1.47 million, up 1.4% on a year earlier, while the average interest rate on new buy-to-let loans fell to 4.71%, down 29 basis points year-on-year. Arrears cases fell to 8,960 in the quarter, down 560 from the previous three months, while the average interest cover ratio rose to 221%, up from 204% a year earlier. Separately, FCA data for the fourth quarter of 2025 showed the share of gross mortgage advances for buy-to-let purposes rose 0.2 percentage points from the previous quarter to 8.4%, slightly above the level a year earlier – a sign that landlord borrowing has stabilized even as lending criteria have tightened elsewhere in the mortgage market.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: "Paragon's analysis shows just how much the market has evolved over the past three decades." She said landlords have become increasingly strategic in managing portfolios and responding to changing tenant expectations, housing standards and regulation.
Nathan Emerson, chief executive of Propertymark, credited the sector's origins to cross-industry cooperation, saying it "showed what can be achieved when different parts of the housing industry work together."
Remortgaging now dominates broker activity
Paragon's report found that remortgaging now accounts for the majority of buy-to-let lending activity, reflecting the growing influence of experienced landlords managing established portfolios rather than new investors acquiring individual properties. That finding is consistent with the wider UK Finance and FCA data, which point to portfolio landlords, rather than first-time investors, increasingly setting the pace of demand. The report also found the proportion of non-decent rental homes has more than halved over the past two decades, with energy efficiency standards improving as landlords continue to invest in upgrades.
Nigel Terrington, chief executive of Paragon Banking Group, said: "Buy-to-let is part of Paragon's DNA." He added that the lender has supported landlords "through every stage of its development over the past three decades."
Since its 1996 launch, the sector has navigated the global financial crisis, tax reforms, tighter regulation, a pandemic and a period of higher inflation and interest rates, according to Paragon.
