New landlords squeezed out of buy-to-let

Fewer first-time landlords entered the buy-to-let market as mortgage lending tightened at the end of last year, new figures suggest.

Research last week from the Council for Mortgage Lenders found that the total investment in buy-to-let property increased in the second half of last year, despite the credit crunch.

However, in its monthly survey of letting agents, the Royal Institution of Chartered Surveyors (RICS) found that the number of new instructions for rental property fell at the end of 2007, despite strong tenant demand.

It is the first time since the survey began in 1998 that more surveyors have reported a fall in new landlord instructions than have reported a rise.

Barry Hall, spokesperson for RICS, said: "Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents, but new investors are struggling to get the necessary finance to enjoy this buoyant sector."

However, Katie Tucker from mortgage broker Charcol told More Than Business News: "New investment interest will catch up very quickly in response to the strong tenant demand, as the rental market is flooded with the first-time-buyers who were unable to buy."