According to the Association of Residential Letting Agents (ARLA) Review and Index for Q3 2007, more than half of all buy-to-let investors (54%) expect to increase their portfolios over the coming 12 months.

However, if mortgage interest ceased to be an allowable business expense, more than four out of ten investors (42%) said they were uncertain what they would do.

A significant minority, 28%, said they would certainly sell some property, while 10% said they would sell out of the private rented sector altogether.

Ian Potter, ARLA operations managers, said: “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 affect the rental market and severely curtail choice in housing. Buy-to-let investors have refinanced the private rented sector and restored social acceptability to renting.”

In addition, the average Loan to Value (LTV) ratio for buy-to-let investors in the last quarter was 59%, marginally less than in the previous quarter. The proportion with LTV ratios between 51% and 75% has dropped marginally, with a corresponding rise for those with ratios between 25% and 59%. Just over a quarter of all buy-to-let investors have loan to value ratios of between 76% and 90%.