Investing in property has become such a mainstream occupation that it is easy to forget that buy-to-let is a relatively recent phenomenon.

Rising property prices, the proliferation of newly built flats and the unreliability of pensions has helped to make property the cornerstone of many people’s retirement plans.

But until just over ten years ago, when the law was changed to encourage small landlords and ordinary homeowners to invest in rental homes, letting was the preserve of a few wealthy and sometimes ruthless individuals.

The most notorious was Peter Rachman, who exploited tenants in Notting Hill, in West London, in the 1950s and 1960s. So brutal were his tactics that the term Rachmanism is now used to describe slum landlords’ ill treatment of tenants.

Law-abiding landlords were often saddled with sitting tenants and had to put up with limited returns. The poor image of landlords and the total security of tenure for tenants made lettings unpopular until 1988, when the Housing Act deregulated the rental market and rebalanced the rights between landlords and tenants.

The real revolution, however, came in 1997 when amendments to the Housing Act were brought into force. The change made it easier for landlords to regain possession of their properties, reducing the risk of being left with a sitting tenant. The move persuaded mainstream lenders to offer cheaper loans to potential landlords and buy-to-let was born.

It was an initiative, devised by the Association of Residential Letting Agents (ARLA), that completely changed the market, turning thousands of homeowners into landlords.

Previously, obtaining a mortgage for a rental home was difficult and expensive. Property investors were often forced to buy at less attractive commercial rates. Key factors such as rental income were not taken into consideration. Today nearly a million households live in buy-to-let properties. They are worth well over £120 billion, contributing £30 billion to the economy each year, according to ARLA.

In the mid1990s less than half of the private rented sector was owned by individuals. Now they own two thirds of it.

The changes have benefited tenants, too. Competition between landlords has pushed up standards and pulled down rents. Buy-to-let has helped to revive parts of the housing market and boost inner-city regeneration.

The demise of buy-to-let has been forecast at least once in the past ten years. But predictions that landlords will sell in droves when the market slows have so far failed to materialise. Instead, buy-to-let is expected to grow further as demands for rental homes increase. The rise in single-person households, immigration and the demise of the first-time buyer, as more young people are priced out of the property market, is good news for landlords.

— Plan of attack

Who is being targeted? Broadly speaking, two groups –those pretending not to be renting out their properties, and those claiming too much tax relief out of confusion

How else is the taxman clamping down? He has introduced the threat of daily penalties – £60 per day – to taxpayers who refuse to return self-assessment forms and who have failed to pay outstanding tax. There is no cap on these penalties

Why the aggression? Revenue & Customs is trying to scare people into taking part in a tax amnesty to limit the number of cases it needs to prosecute once this ends in four weeks’ time.

Does the Chancellor need the money? Yes. The gains from this particular move may be relatively small, but it is all part of a programme of attacking “aggressive tax avoidance”. To bring the public sector deficit under control, Gordon Brown is hoping to couple a spending squeeze in Whitehall with an increase in tax take

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