The number of buy-to-let (BTL) products on the market has reached its highest level in nearly a decade despite sweeping changes to tax and regulation.
A 7 per cent increase in the number of buy-to-let deals between August and September brought the overall total to 1,735 - the greatest amount of loans for landlords available since December 2007, according to Moneyfacts.
The buy-to-let sector has been battered by 2016’s 3 per cent stamp duty surcharge on additional properties and the gradual phasing out of income tax relief for landlords, which is set to take place by 2020.
A further blow came with the Prudential Regulation Authority’s (PRA) introduction of more stringent affordability rules on 1 January this year, followed by stricter underwriting guidelines for portfolio landlords to be brought in by the end of September.
But while there was a steep decline in product availability after the PRA’s initial roll-out, the number of deals on offer has bounced back quickly.
Soaring competition has also put downward pressure on rates, with the average two-year buy-to-let fixed rate deal down from 2.91 per cent in August to a record low of 2.86 per cent in September.
However, there have been signs that landlords may be passing on the extra costs to tenants by hiking rents, while those with larger portfolios have been making sell-offs.
Charlotte Nelson, finance expert at Moneyfacts, said: “Providers are now starting to get ready for further changes at the end of September, which will see lenders apply stricter standards to those with four or more properties.
“It is still uncertain how providers will choose to react to the new changes, but product numbers could climb as providers start to target their products to the two different types of borrower. However, despite this increased choice, rates might not improve.
“The extra pressure on the buy-to-let market could be a turning point, with the competition that is currently alive and well amongst providers perhaps starting to ebb as they shift their focus to ensuring the new regulation is followed.”
Liz Syms, chief executive at London-based Connect Intermediaries, said the number of deals on offer was largely a result of more lenders looking to attract niche business.
She said: “There are more lenders than before the credit crunch. The majority of those entered the market before a lot of these changes were known, and they have not been put off.
"They have seen buy-to-let as a niche market where there is an opportunity to get some market share at a higher return for the money than competing in the mainstream residential market.
“Some have come into the buy-to-let arena first, like Foundation. They have been doing buy-to-let for years but only recently come into residential.
"Because buy-to-let is not fully regulated by the Financial Conduct Authority, it means they can come to market a bit quicker.
“It is great for us in the market that there is so much choice for clients, and that is probably needed with all these changes going forward.”