The firm believes that while there has undoubtedly been a number of landlords who have exited the market due to reduced profitability and more stringent regulations there are many who remain committed to the BTL model.

The latest figures show that the number of new BTL loans achieved its second-highest figure for the year in October 2019 at 6,600 while the value of these loans equalled the highest for the year at £1,000m. BTL remortgaging was at the second-highest level for the year in October 2019 at 6,600 and matched the highest monthly value of the year at £2,700m.

The number of BTL mortgages in arrears has fallen by 5% in the third quarter compared to the same quarter in 2018 and the total number accounts for just 0.23% of all BTL mortgages outstanding.

David Alexander, joint managing director of apropos by DJ Alexander Ltd, explained: “Many landlords will spend some of their Christmas holidays considering their future in the sector. Next year will see the culmination of a series of changes to taxation initiated by George Osborne which have sought to reduce the financial benefits of being a landlord and consequently pay more tax to the Treasury.

“The limiting of landlords Mortgage Interest Tax Relief (MITR) phased in over four years from 2017/18 means that many landlords are facing considerably higher tax bills in the future as relief on interest is removed. Equally the loss of relief on wear and tear is a further cost to landlords.

“From April 2020, for landlords who once owned and lived in their properties but rather than sell decided to rent the availability of capital gains tax lettings relief has all but been removed and will now only apply where owners share occupancy with the tenant. This could have potential tax effect of increasing the CGT liability by up to £11,200 where a higher rate landlord qualified for the maximum available amount of letting relief.

“It is clear that many landlords have found the last few years a challenge. Greater regulation, more stringent financial controls, and reduced tax benefits means that the business of being a landlord has become more complex, more costly, and less profitable. Many have already thought enough is enough and have sold up and exited the market.”

He added: “But there is still money to be made in the private rented sector and being a landlord can provide a reasonable income and a healthy pension. But landlords need to be more savvy to make it work and much more pro-active than in the past. You must ensure your finances are arranged as efficiently as possible, that your costs are reduced to the minimum, and that your margins are as good as they can be.

“You could move your investment to parts of the country with higher yields (Nottingham, Manchester and Liverpool for good yields, and the North West for good capital growth for example).

“Being a landlord has never been more difficult but like all businesses the best people will understand the need for flexibility and be ready to change to meet the circumstances. It is inevitable that there will be change and you must make your business model to match the market.

“There may be some casualties along the way but BTL remains a profitable and viable investment for those who adapt and thrive in a changing market.”