According to buy-to-let broker Mortgages for Business, the main driver for remortgaging was to free up equity in landlords’ existing properties in order to buy more rental properties.

Its latest buy-to-let index revealed that the proportion of landlords refinancing Houses in Multiple Occupation (HMO) jumped from 55% in Q4 2011 to 80% in Q4 2012.

Remortgaging on Multi-Unit Freehold Blocks (MUFB) grew from 76% to 78% over the same period.

David Whittaker, managing director of Mortgages for Business said:

“Gross yields on buy-to-let property are particularly attractive at the moment thanks to the mess which the first-time buyer market finds itself in. Property prices are flat and tenant demand is stratospherically high, which is why more landlords are refinancing and manoeuvring themselves into a position to add to their portfolios.

“While high demand and subdued property prices are the carrot, certain lenders are the stick, particularly RBS and Irish lenders which are demanding landlords refinance elsewhere as they try to reduce their exposure to property.”

The number of buy-to-let lenders increased in Q4 2012 from 25 to 26. The number of buy-to-let products available fell by 5% from 465 in Q3 to 444 in Q4 – although this was to be expected at the year end, with lenders withdrawing products and preparing fresh launches for the New Year.

Whittaker said: “Historically lenders always withdraw plenty of mortgages in the lead up to Christmas and lay the groundwork for big product launches in the New Year. So we expect the range of products to recover and improve in 2013.

“All eyes will be on Funding for Lending this year. It has flattered to deceive so far but plenty of the head honchos at the Bank of England think it will spring into action in 2013. If it does, we should see the availability of buy to let mortgages increase. Landlords have been saying lenders aren’t doing enough to help them and cater for their ambitions, so 2013 should bring more joy for frustrated investors.”

Meanwhile, data from the Association of Residential Lettings Agents (ARLA) shows an increase in landlord investment throughout 2012, with the average number of buy-to-let properties owned by landlords peaking at eight in the final quarter of 2012, up from seven at the beginning of the year.

ARLA reported increased landlord activity, with 29% stating they have bought a property in the past year compared to 25% at the start of 2012. Increasing confidence in the sector was mirrored in a hike in the value of buy-to-let mortgages, up 8% in Q4 2012 at £4.2 billion according to the Council of Mortgage Lenders.

Ian Potter, managing director of ARLA, said:

“The latest data from ARLA suggests that landlords are carefully but concertedly increasing their portfolios; activity is returning to the buy-to-let market. Whilst many investors naturally remain cautious, the climb to an average of eight properties per landlord shows that 2012 was a strong year for the PRS.”