BTL mortgage market celebrates 25th anniversary

Today (24th September) marks the 25th anniversary of the official launch of the BTL mortgage.

In 1996, the Association of Residential Landlords (ARLA) worked with a small group of lenders, including Paragon Bank, to develop a mortgage product specifically tailored to landlords.

Since then, the private rented sector has seen significant increase, accounting for 4.4 million, or 19% of households, in England in 2019/20.  

According to Paragon Bank’s Driving Standards in the Private Rented Sector report, the portion of homes in the sector classed as ‘decent’ under government standards has increased from 53.2% to 76.7% since 2006, totalling 3.6 million houses.

The energy performance of the sector has also improved with a 272% increase in PRS homes with an energy rating of C or above since 2009 to 1.8 million. 

Looking back, Robert Jordan, ARLA Propertymark’s past president, said: “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.

“It became clear that the mortgage options weren’t suitable so, together, we designed a BTL product that would enable more investors to purchase an investment property and let it under the new Housing Act 1988 regulations.”

Richard Rowntree, managing director for mortgages at Paragon Bank, commented: “Since being launched as a mortgage product specifically designed for landlords 25 years ago, BTL finance has helped to transform the PRS. 

“The PRS is now a vital component of the UK’s housing provision, with renting no longer a last resort.”

Leave a comment