There was a significant increase in the volume of buy-to-let mortgage products available in the UK in the first quarter of this year.

The latest index from Mortgage for Business shows that product numbers for buy-to-let mortgages rose from 963 in Q4 2015 to 1,105 in Q1 2016, supported in part by the introduction of more products targeted at landlords using a limited company to invest in property. 

Remortgages continued to exceed new purchases in all categories with the exception of HMOs.

David Whittaker (pictured), managing director of Mortgages for Business, said: “With tenants looking for less expensive accommodation and landlords looking for higher yields it is no surprise that the number of HMO purchases has risen in the last quarter. 

“Even though remortgage transactions were higher this is not to say purchase numbers were down. All types of residential investment showed a marked increase in the number of purchase transactions as investors rushed to beat the 3% stamp duty surcharge deadline.” 

But with concerns mounting that the property investment market is moving into bubble territory, the Bank of England has announced plans to introduce more stringent checks on buy-to-let lenders. 

The Bank’s Prudential Regulation Authority recently said it was putting in place a “guardrail” to prevent banks from making risky loans, warning that 20% of lenders were not carrying out the necessary checks.

The primary concern is that a bubble in the buy-to-let market could cause a wider housing market slowdown. 

Andrew Bailey, who currently heads up the Prudential Regulation Authority, told the press: “I don’t think it benefits anybody, including people who own buy-to-let properties, to have an unsustainable boom-bust cycle in the UK property market. I’ve been in the Bank for 30 years and I’ve seen two of them happen and I’m very keen not to see a third one.”

Mortgage lenders will now have to take into account all the costs a landlord might have to pay when renting out a property as well as the borrower’s wider financial situation, including their personal tax liabilities and living costs, which in turn could see lending to landlords fall by up to 20% over the next three years, experts estimate. If accurate, this would reduce housing supply in the buy-to-let sector, potentially pushing up rents in the process.