After a very tough couple of years the business of being a landlord appears to be picking up. Most letting agents in central London are reporting a flood of new tenants coming through their doors and bidding wars breaking out even for modest homes.

A large proportion of accidental landlords - homeowners who decided to let rather than sell when the market turned sour in 2007 - have now sold, but there have been few new entrants to provide a supply of property to meet the growing demand.

One of the biggest problems was that when the credit crunch bit, most lenders pulled the plug on buy-to-let mortgages before all others. Ironically, the fall in house prices coupled with the drop in mortgage rates made buy-to-let far more profitable than it had been at the height of the boom, but without a line of credit few landlords could take advantage.

That is very slowly starting to change; according to figures from the Council of Mortgage Lenders, the number of buy- to-let loans rose in the last six months of 2009, albeit from a very low base. Total gross lending to landlords in 2009 was £8.5 billion compared with £27.2 billion in 2008. In fact, lending to landlords last year was pretty similar to lending in 2001, the year the buy-to-let mortgage became mainstream.

While many people predicted a meltdown in the world of property investment, even those landlords who have struggled in the past to make ends meet are now faring much better: repossessions fell from 1,600 in 2008 to 1,200 (or one in every thousand buy-to- let properties) and landlords in arrears fell from 32,900 in the last three months of 2008 to 20,700 at the end of last year.

While these signs of growth are welcome, Michael Coogan of the CML says the pace has to quicken. "We are encouraged by this recovery," he says. "But the new business market remains well below previous levels and below thelevel of activity which is needed to enhance a vibrant private rented sector."

However, Coogan is unhappy that the Financial Services Authority is considering plans to regulate the buy-to- let mortgage market (at present borrowers do not have the same protection as owner occupiers), although after the reckless practices of many specialist buy-to-let lenders - Northern Rock was a very aggressive player in this market - most investors would welcome the attention of a watchdog.