A recent survey from the Association of Residential Letting Agents (ARLA) has indicated that investment landlords remain positive about the prospects for the buy-to-let market, with 90 per cent claiming they would not sell if house prices were to fall in the future. In addition, 54 per cent of landlords surveyed in August expected to make further buy-to-let investments over the following 12 months.

However, calls for the Government to scrap tax incentives for buy-to-let investors could affect sentiment in the sector, ARLA has said. In June the president of the Chartered Institute of Housing (CIH), Paul Diggory, called for the Government to review relief on buy-to-let mortgage interest repayments. In a speech to the CIH Annual Conference in June, Diggory asked: ‘Why does the Government still offer tax incentives to those who buy, simply to rent - giving buy-to-let owners a financial advantage over those trying to buy their first home and pushing prices even higher – and further out of reach?’

The ARLA survey showed that 42 per cent of landlords were uncertain about the future of their portfolios if mortgage interest ceased to be an allowable business expense. The solution for 28 per cent would be to sell some of their properties, while ten per cent said they would sell out of the sector completely.

Ian Potter, operations manager at ARLA, argued, ‘With the institutions less interested in the private rented sector and private equity companies not filling the gap, the loss of any private individual investors would seriously effect the rental market and severely curtail choice in housing.

‘Private buy-to-let investors have refinanced the private rented sector and restored social acceptability to renting.’