The buy-to-let market is showing tentative signs of recovery following a torrid few years for landlords, industry experts have claimed.
The removal of favourable tax breaks and a tightening up of other allowances have caused landlords’ profits to be squeezed.
This has caused many investors to consider selling up and deterred others from expanding their property portfolios.
However, activity has started to increase in the last few months thanks to low mortgage rates.
Research published by UK Finance, the banking industry lobby group, showed the number of new buy-to-let purchases increased by 5.5pc in the year to July 2019 – the latest figures available.
Remortgage activity increased by 2pc in the same time-frame.
Phil Rickards of BM Solutions, one of the country’s biggest buy-to-let lenders, said that substantial profits could still be made from property.
“Rental demand remains high, rents are higher still – up to £861 a month, according to Your Move [an estate agent] – and buy-to-let mortgage rates are low,” he said.
“So, while continued challenges for landlords (and there are more to come) mean we are likely to see the buy-to-let market stagnate in the near future, the long-term demand for the sector is clear.”
Mark Harris of SPF Private Clients, a mortgage broker, said low rates would entice more landlords back to the sector.
Last week, Leeds Building Society launched a two-year fixed-rate deal for landlords with a 20pc deposit. It will offer a 2.94pc rate, subject to a £2,499 fee, which is the lowest in the market.
Mr Harris said: “Rates are cheap so landlords extending their portfolios or remortgaging can still get a good deal, even if the new rules are making it harder to make money.”