The level of landlord business looks set to stabilise over the next 12 months, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index, based on interviews with 200 mortgage intermediaries.

The study found that the majority – 65% – of intermediaries expect to see a stable environment for those investing in the private rented sector.

This is the first time that intermerdiaries have forecast a stable outlook for buy-to-let since the 2015 Summer Budget when George Osbourne, then chancellor, announced plans to phase out tax relief on buy-to-let mortgages.

The now former chancellor’s decision to introduce a 3% stamp duty surcharge, coupled with new tougher mortgage rules, has also had a negative impact on the buy-to-let market.

The latest data from UK Finance show that there was a near 10% drop in new buy-to-let home purchase mortgages in May, as a series of reforms continues to have a punitive effect on landlords.

Some 5,500 new buy-to-let home purchase mortgages were completed in May, down 9.8% compared with the corresponding month last year, reflecting the changing regulatory and fiscal environment for landlords. By value this was £0.7bn of lending in the month, 22.2% down year-on-year.

However, there were 14,600 new buy-to-let remortgages completed in the month, some 15% more than in the same month a year earlier. By value this was £2.3bn of lending in the month, 21.1% up on the same period last year.

Intermediaries say almost half – 49% – of landlord mortgage applications are for a straightforward remortgage, with six out of ten landlords who are remortgaging looking to lock in a better interest rate.

Encouragingly, this quarter’s FACT results also include the first increase in the proportion of landlords raising finance with a view to adding to their portfolio since 2015.

John Heron, managing director of mortgages at Paragon, said: “It’s encouraging to see intermediaries forecast a more stable outlook for buy-to-let business after such a long period of negative sentiment.

“Purchase activity continues at much lower levels but it is interesting to see the step up in remortgage business as landlords look to maximise certainty and minimise costs as the interest rate changes start to take effect.”