Despite changes that make financing buy-to-let properties more expensive, this has not put off buy-to-let landlords continuing to invest in rental property.

In the last budget, Chancellor George Osborne introduced an increase of 3% in stamp duty for people investing in houses to let. Next year, tax relief on buy-to-let mortgages will be cut, and a further blow for landlords is the scrapping of the ‘wear and tear’ allowance.

These cuts have not put off landlords investing in rental property though; Allsop, the auctioneers, said that investors are reducing their bids at property auctions to compensate for the extra costs in purchasing property.

Auctions of London houses still attract high bids, with a recent Central London auction attracting around 1,500 buyers who bid high prices, resulting in many properties being sold well above guide prices.

Some investors are looking outside London where property prices are cheaper. There is still a high demand for rental properties in most regions and this is not expected to ease in the near future.

Other landlords are raising rents to cover the extra costs they incur because of the government’s cuts, or are switching to buying homes that need improvement with a view towards a quick sale after refurbishment.

Despite these obstacles, investing in rental property is still considered by many experts to be a good investment, with Stephen Ludlow of estate agents Ludlow Thompson summarising:

“Investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments.”