Paragon Bank has marked 30 years since launching its first mortgage product for landlords, celebrating three decades of support for the UK’s private rented sector and its pioneering role in the creation of the buy-to-let mortgage market.
The specialist lender wrote its first landlord mortgage in 1995, a year before the term “buy-to-let” was formally introduced.
That first loan – £31,150 at 70% loan-to-value – was secured against a property worth £45,000.
Since then, Paragon has written more than 240,000 landlord mortgages with a combined value of around £33 billion, supporting over 300,000 landlord customers.
DEVELOPING BUY-TO-LET
The bank played a foundational role in the development of the buy-to-let sector, working alongside the Association of Residential Letting Agents (now Propertymark) and key intermediaries to formally launch the product category in September 1996.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, says: “Buy-to-let is in our DNA, launching our first landlord mortgage a year before the term was even invented.
“We pioneered buy-to-let in the UK and our landlord customers have provided a home to millions of tenants over the last three decades.
“As we all know, the market has changed significantly in the 30 years since we wrote our first landlord mortgage. We’ve changed with it, gaining in-depth knowledge, expertise and experience and building a reputation for one of the leading specialist lenders.”
MOVING FORWARD
And she adds: “As well as celebrating our fantastic heritage, we’re continuing to move forward and evolving for the benefit of our customers and partners. This evolution can be seen in the recent launch of our bespoke mortgage application system, which has enabled us to vastly improve the broker experience.
“This forms part of a company-wide digitisation programme and supports our diversification strategy which sees us support a broader spectrum of landlords – big and small, old and new – to invest in much needed homes for renters.”
£300 BILLION INDUSTRY
John Heron, who headed the mortgages division at Paragon from its inception until his retirement in 2019, oversaw the lender’s entry into the buy-to-let market, recognising the potential for a product that has since grown into a £300 billion industry across two million loans.
Paragon’s legacy in specialist lending includes finance for professional landlords with complex portfolios, those investing in HMOs (houses in multiple occupation), and clients operating through limited companies.
More recently, the bank has broadened its reach to smaller landlords and enhanced its systems to improve processing times.
CLEAR OPPORTUNITY
Russell Anderson, Paragon’s Commercial Director of Mortgages, says the 1990s presented a clear opportunity: “Looking back to the mid-90s, the UK was just emerging out of a deep recession that highlighted the need for a housing tenure that provided a home for those who didn’t want to or couldn’t buy a home.
“Underpinned by stronger housing regulation, there was a desire for landlords to purchase homes to rent to the growing tenant market.
“We saw the market opportunity presented by what we know now as buy-to-let mortgages, but at that point didn’t have a collective name. It was hugely exciting and we quickly recognised that we had tapped into a high-growth sector.
“Buy-to-let is now a mature, seasoned product that has proven its resilience through many economic cycles, as well as significant regulatory change. This strong credit performance is underpinned by demand for good quality, flexible homes, something that will continue as the population grows.”
VITAL ROLE
Buy-to-let has consistently demonstrated robust credit performance, with arrears levels outperforming the owner-occupied mortgage sector in 24 of the last 25 years.
Paragon’s anniversary comes as the private rented sector continues to play a vital role in meeting the UK’s housing needs – with landlords providing homes to a growing and increasingly diverse tenant population amid ongoing supply constraints in both the rental and sales markets.
