When it was introduced in 1996 the Association of Residential Letting Agents and a small panel of lenders including Paragon recognised the demand for private rental property for landlords and tenants.
Today the private rental sector is the second largest housing tenure in the UK, overtaking social housing for the first time since 1961 in 2012/2013.
In 1996 there were 2.4 million homes in the private rental sector, while the figure has now doubled to 4.9 million.
The demographic of people living in private rental homes has also changed in that time, as 13% of tenants were families in 1996 compared to 20% today.
John Heron, managing director of Paragon Mortgages, said: “The buy-to-let market has been a force for good for the wider UK housing market.
“Before the development of buy-to-let landlords had few options when considering how best to finance a rented property.
“The finance that was available was expensive and poorly matched to the customer’s needs. It was particularly difficult for new landlords to start to build a portfolio.
“Buy-to-let has changed all this. It enabled landlords to access finance that was better designed to meet the specific needs of the rental market at much more competitive interest rates and thus helped expand quality and choice in the PRS.”
Valerie Bannister, president of the Association of Residential Letting Agents, added: “With the deregulation of the industry through the 1988 Housing Act, combined with the introduction of a suitable financing model through buy-to-let, the private rental sector has grown substantially since the 1990s.
“It’s now a thriving force in our housing market that’s growing year on year.
“Without a vibrant buy-to-let market, landlords couldn’t provide the much needed, good quality and affordable accommodation for tenants that they do.”