Paragon Bank has marked the 30th anniversary of the launch of its first mortgage product for landlords, celebrating three decades of supporting the UK’s private rental sector.
Paragon wrote its first mortgage for landlords to acquire rental property in 1995, a year before the term ‘buy-to-let’ was invented. The first product loan was for £31,150, which was at 70% loan-to-value (LTV) on a property valued at £45,000.
Mortgage industry stalwart John Heron headed the new mortgage product offering and led the mortgages division until his retirement in 2019. During the three decades since, Paragon has supported more than 300,000 landlord customers, writing over 240,000 mortgages, valuing approximately £33 billion.
Responding to the growing need for a strong and sustainable rental market to provide better balance to the UK’s housing provision, Paragon was a pioneer of the buy-to-let market, joining a small group of lenders to work with ARLA, now Propertymark, and key specialist intermediaries to launch the term ‘buy-to-let’ in September 1996.
The buy-to-let market is now a mature product offering, with approximately £300 billion outstanding across two million loans. The sector has also proven its credit resilience, with arrears on buy-to-let loans outperforming the owner-occupied sector for 24 out of the last 25 years.
Paragon has built a reputation as one of the leading specialist lenders, providing finance for landlords with large-scale property portfolios, those investing in complex properties, such as houses in multiple occupation (HMOs), and those operating in limited company structures. The bank has diversified to also support smaller landlords to grow their portfolios and has recently enhanced its systems and processes to make these applications faster and easier.
Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank, said: “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.”
She added: “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.”
Russell Anderson, Paragon Bank’s Commercial Director of Mortgages, added: “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 these 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.”
