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Buy-to-let sector 'might collapse'

The buy-to-let market in the UK could be on the verge of meltdown, the Daily Mail reports.

Financial fallout from the credit crunch - which has seen upward pressure on home loan costs and an apparent slowdown in property sales - could lead to the collapse.

Profits for landlords have fallen over the past six years, with annual rent yields dropping from January 2002's 9.84 per cent to January 2008's 6.2 per cent.

Tightening credit criteria has also seen the withdrawal of many deposit free, otherwise known as '100 per cent', mortgages - which many buy-to-let investors used to buy their first property.

However, the sector appears to be still expanding, with total buy-to-let mortgages increasing by 23 per cent last year according to the Council of Mortgage Lenders.

Speaking to the newspaper Tim Hague, managing director at buy-to-let lender Birmingham Midshires, commented: "From November 2006 to the middle of last year there was strong competition in the marketplace and some lenders relaxed criteria to where some of us didn't want to go.

"These are lenders that no longer exist."

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