Shawbrook Bank’s annual BTL barometer has revealed the biggest challenges facing investors over the next six months, with landlords citing regulation (22%), interest rate movements (21%) and lending restrictions (16%).

With regards to regulatory challenges, the change that has affected landlords the most is the reduction on the tax relief for buy-to-let mortgages, with over half of landlords (52%) claiming that this has had the biggest impact, an increase on last year’s results (35%).

Over a fifth of landlords (21%) said that the 3% extra stamp duty levy was the biggest regulatory change.

To counteract these changes, a number of landlords are looking for ways to protect their portfolios.

A third of landlords (33%) have – or are planning to – set up a limited company, 18% intended to remortgage, while a fifth (19%) were looking to sell their property/properties.

•   Property investors opting for alternative finance due to BTL struggles
•   Helping a BTL investor grow their property portfolio
•   Five-year fixed BTL rates continue to slide

In addition, almost half of landlords (49%) said that they were going to wait and see what happened over the next six to 12 months before they put any measures into place.

“Stricter affordability tests for portfolio landlords and interest rate rises will make it harder for some to get funding and this month will also see the next phase of reductions in tax relief for buy-to-let, further hitting landlords' profits,” said Karen Bennett, managing director at Shawbrook Bank Commercial Mortgages (pictured above).

“It is encouraging to see professional landlords adapting their strategy in line with regulatory change, thereby helping to ensure the long-term sustainability of the industry.

“We have seen a slight cooling as landlords evaluate their options, not rushing into purchases and holding existing property.

“It is important to recognise, however, that BTL remains a crucial component in the wider UK housing landscape, and data suggests that although investors may tread carefully throughout 2018, they retain confidence in the fundamentals of this market.”