The lender will initially target professional landlords, a category which it identifies as being underserved by current buy-to-let providers.

Paragon’s product range includes fixed rates priced from 5.30%, available up to a maximum of 65% LTV, and trackers from 4.30%, also available up to 65% LTV. The maximum LTV currently on offer is 75%.

Deals will be available for limited companies, multi-unit blocks and Houses in Multiple Occupation

Paragon intends to stick to its former strategy of manually underwriting each case and employing its own surveyors to assess the properties it lends on.

Paragon will start lending immediately through a panel of brokers with close knowledge of the buy-to-let market, and plans to widen distribution over the next few weeks. It will also accept direct business.

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John Heron, Paragon Group’s director of mortgages, said: “We are really excited about our return to new lending. The market is still fairly subdued and the road back to a ‘normal’ market is going to be a long one, but we are back in the race and we will do our level best to make sure that we expand the choices available in buy-to-let finance for landlords and intermediaries.

“Access to buy-to-let mortgage finance is still a major issue for residential property investors, and particularly professional investors who may exceed lenders’ aggregate lending limits or who find that their more complex or unique finance requirements cannot be met by the standard buy-to-let lenders.

“Competition is vital for a healthy and vibrant buy-to-let market, and we aim to provide that competition. Supply of private rented sector property is already under severe strain, which is leading to rental inflation. It will be professional landlords that stimulate the growth of the sector, and we want to be there to help them achieve this.”

David Brown, commercial director of LSL Property Services, said: “It’s great news for investors that Paragon has returned to the market. Demand for rental properties is high and rents have risen for seven months in a row. But the constricted supply of cheap mortgage finance has been strangling new investment in the private rental sector.

“We are clearly still a long way from the market of two years ago, but the re-entrance of lenders like Paragon should give professional landlords hope that the lending market is beginning to loosen and that more funding is becoming available. The private rental sector plays a pivotal role in housing the UK’s growing population, and an increased availability of mortgage finance would allow the sector to grow to cover the UK’s shortfall in affordable housing.”