The big question is: will those landlords will start dumping their properties on the market, fuelling the downward spiral in the housing market as a whole? Or will the prospect of a rise in rents, as falling property values and the credit crunch mean a growing number of would-be housebuyers turn to the rental market instead, encourages landlords to stick with it?
Confusingly, there is plenty of evidence to support both arguments. Buy-to-let statistics for the first half of 2008, to be released by the Council of Mortgage Lenders (CML) on Tuesday, are expected to confirm that buy-to-let transactions - or at least those financed by mortgages - have fallen even more dramatically than the 50 per cent slump in the mortgage market as a whole. And insurance company Skandia predicted that as much as £77bn of buy-to-let mortgages (or more than 60 per cent of the £126bn outstanding at the end of March) could be redeemed as the market returns from the recent boom, which has seen a 60-fold rise in the number of buy-to-let mortgages in just a decade, to a more normal level of activity. That is at least partially supported by a recent warning by financial advisers Hargreaves Lansdown that as many as 200,000 of the 350,000 or so buy-to-let mortgages taken out last year are already suffering from negative equity - properties worth less than their mortgage value - and 10,000 have already run up arrears on their loans.
Has Britain’s buy-to-let market been rent asunder?
guardian.co.uk/business/2008 … oletmarket