30 years of BTL: why it continues to work

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Thirty years after buy-to-let was launched, the market looks very different. Economic cycles and policy reform have reshaped the sector, yet landlords continue to adapt, invest and provide homes for millions of renters

SPEND ANY length of time in the buy-to-let sector, and you quickly realise that success rarely comes from standing still. Over the past 30 years, landlords have operated through economic cycles and shifting government policy. During that time, the sector has become more professional, and privately rented home providers have increasingly taken a strategic approach. Weighing up things like how they borrow or hold their properties, how to finance growth or regulatory compliance and where and what homes they buy, landlords continue to prove that buy-to-let represents a sound long-term investment. For brokers, understanding how landlord clients have responded to previous periods of change offers valuable insight into how they are likely to approach the next. Numbers show buy-to-let still stacks up Over the years, I’ve heard many times that buy-to-let is dead, but there are numbers to challenge what can sometimes be the

Paragon Bank is a leading specialist lender, providing finance solutions for professional landlords, property investors and businesses across the UK. Renowned for its expertise in buy-to-let lending, including HMOs, multi-unit blocks and more complex property investment transactions, Paragon also offers development finance, commercial lending, asset finance and business finance, alongside a range of savings products. Part of FTSE 250-listed Paragon Banking Group PLC, established in 1985, the Group manages more than £16 billion of assets and supports over 340,000 customers.

Buy-to-let remains profitable

Buy-to-let turns 30

“Landlords continue to prove that buy-to-let represents a sound long-term investment”

Louisa Sedgwick, Paragon Bank

type of sensationalised, click-bait headlines that now dominate our feeds. Recent research undertaken by Pegasus Insight on our behalf for Paragon found that 86% of landlords reported operating profitable lettings businesses, while the proportion experiencing rent arrears fell to the lowest level recorded by the long-running Landlord Trends report. This aligns with industry lending data, with UK Finance figures showing that three-month-plus arrears on buy-to-let mortgages have fallen for nine consecutive quarters and stood at just 0.52% of outstanding mortgages at the end of Q2 2026. Buy-to-let has also consistently outperformed the wider owner-occupier market on arrears performance over the long term. At the same time, the latest analysis of our own lending data found that average gross rental yields exceed 7% and returns can be greater still where landlords target specific property types or areas. HMOs can generate average gross yields of 8.9%, while properties in established student markets also outperform the wider market, generating average yields of 7.32% compared with 6.86% elsewhere.

who buys rental property, how it is owned and the movement of investment around the country. The Stamp Duty surcharge gives us a useful longer-term example. In 2015, the south of the country accounted for nearly 56% of mortgaged buy-to-let house purchases, while the Midlands and north represented less than 35%. By 2025, the Midlands and north accounted for just over half of purchases, and the south’s share had fallen to around 38%. The surcharge is not the only reason for that change, but being charged as a proportion of the purchase price and paid upfront, it has acted as a greater barrier to investment in higher-value markets. The influence of government policy can also be seen in how landlords structure their portfolios. According to UK Finance data, 43% of mortgaged buy-to-let purchases were completed through limited company structures in 2025, up from just 7.5% in 2018. The phased introduction of Section 24, which restricted mortgage interest tax relief for individual landlords, was one of the key factors behind that growth.

As limited company ownership has become more common, understanding the differences between corporate and personal borrowing has become an increasingly important part of the specialist buy-to-let market. In response to the energy efficiency and quality of privately rented homes receiving greater attention from both policymakers and tenants, home providers within the sector have continued to invest in the homes they already own.

Analysis of industry data found that landlords withdrew £2.37 billion in equity at remortgage during 2025 to fund property improvements. This demonstrates the extent to which mortgage finance is being used to support landlords to remain compliant, increase the value of their assets and provide high-quality homes for renters. Government data reveals the impact of this investment, with the proportion of privately rented homes classed as non-decent falling from 47% in 2005 to 21% in 2023. While there’s still plenty of work to be done to provide tenants with the homes they are right to expect, the link between privately rented homes and poor quality is more tenuous than some would have you believe.

Published September 21, 2026

“Landlords who buy, refinance or improve their properties will continue to need people who understand specialist finance”

Louisa Sedgwick, Paragon Bank

86% of landlords report profitable lettings businesses

Average gross yields exceed 7%

3-month-plus mortgage arrears stand at just 0.52%

Limited companies accounted for 43% of mortgaged buy-to-let purchases in 2025, up from only 7.5% in 2018

Limited companies become mainstream

These are also places where home providers are actively investing. Our buy-to-let hotspot analysis found that the postcodes attracting the greatest number of mortgage completions were typically close to universities or major employers and all generated yields above the wider market average. Policy has changed the shape of the market Tax and regulation have had consequences beyond the immediate cost of meeting a new rule. They have influenced

The data is an encouraging reflection of how the market has evolved up to this point, but if we want to get an idea of how it may shape up in future, we must get a sense of landlord intent. Recently, I spoke with our buy-to-let customers. One has a sizeable portfolio, while the other owns just two properties. Despite operating at very different scales, both told me that they plan to expand, and it was clear that both manage their lettings business more like SMEs than side-hustles. And as is often the case with those who invest strategically, they were both explicit that they value the relative stability of investing in

bricks and mortar, viewing buy-to-let as a long-term investment. For brokers, that outlook is perhaps more useful than another sweeping prediction about the future of the market. Landlords who intend to buy, refinance or improve their properties will continue to need people who understand specialist finance and can apply that knowledge to the particular property, borrower and plan in front of them.