Buy-to-let lender OneSavings Bank increased profits in the first half of the year as landlords rushed to beat new government regulations.

Bosses at the Chatham-based group, which owns the Kent Reliance brand, said it had “successfully” navigated new tax changes for landlords in the first six months of the year.

Underlying pre-tax profits increased by 20% to £78.4 million.

Buy-to-let investors have been increasingly targeted by reforms intorduced by former chancellor George Osborne.

These include a 3% surcharge on second properties and changes to tax relief on mortgage interest from April.

OneSavings Bank said it has been shielded from the impact of these measures because it targets professional landlords rather than individuals looking for a second income from a rented property.

It experienced a surge in buy-to-let applications in the first quarter “as the impact of regulatory changes introducing more complex underwriting standards took effect”.

The FTSE250 challenger bank’s loan book increased by 10% to £1.2 billion, allowing it to boost its interim dividend to shareholders by 21% to 3.5p a share.

Actual pre-tax profits topped £100 million thanks to £34.7 million it received from the sale of a group of mortgage loans to Morgan Stanley.

Chief executive Andy Golding said: “I am delighted that OneSavings Bank has delivered yet another strong set of results for the first half of 2017.

“We continued to successfully navigate significant regulatory and tax change impacting the buy-to-let market in the first half, delivering 26% growth in total organic origination versus the first half of 2016.”

“Given the current pipeline we expect to deliver net loan book growth of at least high-teens in 2017...” - Andy Golding, OneSavings Bank

He said buy-to-let applications “remain strong” so far in the third quarter of the year.

He added: “Given the current pipeline we expect to deliver net loan book growth of at least high-teens in 2017.”

OneSavings Bank was formed in 2011 after private equity investors rescued the Kent Reliance Building Society in 2010 and transferred the business into the new company.

It floated on the London Stock Exchange in 2014.

Its share price was up about 2% in early trading to £3.99.