Figures show the buy-to-let market is beginning to stabilise, with the number of landlords in mortgage arrears falling sharply during the second quarter of this year.

The Council of Mortgage Lenders (CML) said after being hit hard by the credit crunch, only 29,400 buy-to-let investors were at least three months behind with their mortgage at the end of the second quarter, 17% fewer than the previous three months.

The rate at which lending is contracting also eased, prompting the CML to predict buy-to-let arrears had now passed their peak.

Rob Thomas, senior policy adviser at the CML, said: "So long as properties have paying tenants, landlords now have much greater ability to service mortgage payments and we expect arrears to continue to fall as landlords are helped by lower interest rates."

Other figures show that the number of rental properties repossessed by lenders remained unchanged in the second quarter at 1,400. A total of 2,500 receivers of rent, who enable tenants to remain in the property with their rent paid to the lender, were appointed - down from 2,900 during the first three months of the year.

However, the numbers show a huge rise in the use of receivers of rent since the second quarter of 2008 when just 1,000 were issued, compared to 10,800 at the end of June.

The CML also reported a 5% rise in the number of buy-to-let mortgages taken out for house purchase during the three months to 12,950, the first increase for five quarters.

But remortgaging levels among buy-to-let landlords remained depressed, falling by 15% compared with the previous quarter to a new record low of 7,790.

Despite the pick up in lending for house purchase, total advances contracted for the seventh consecutive quarter to £1.9 billion, well down on the recent peak of £12.4 billion seen in the third quarter of 2007.

However, the CML said the rate at which lending was declining showed signs of moderating.

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