James Sim, a 59-year-old former retail manager from Lancashire, has been a landlord for 20 years. He is gradually selling down his portfolio of 11 properties, stating the figures no longer add up. He cites bad tenants, lengthy court processes, increasing red tape, and high taxation with massive fines as key reasons. "For very little less money, and a whole lot less hassle and risk, you can stick your money in a high-interest account," Sim says.

It is 30 years since the buy-to-let mortgage was created in late September 1996, triggering an explosion of rental investment. Today, despite higher rents and tenant demand, regulation and tax changes, higher mortgage rates, and sluggish house price growth have soured the investment case. FT Money examines the outlook as the sector faces the Renters’ Rights Act overhaul.

Buy-to-let emerged when tenant demand surged but private rental stock fell short. Previously, residential mortgages barred subletting, and commercial mortgages had typical terms of just 10 years. Lenders created a new mortgage type judged on rental income.

The sector saw meteoric growth, reaching 840,000 loans by 2006. Analysis by Hamptons shows a £1 investment in 1996 would have generated £22.30 in total returns by this year, an increase of 2,130 per cent. Nearly two-thirds of returns came from rental income.

Aneisha Beveridge of Hamptons notes the sector evolved from accessible investments for first-time landlords into a professionalised sector dominated by older, experienced investors, driven by government policy shifts from 2015 under Chancellor George Osborne.