According to a survey from the Royal Institution of Chartered Surveyors (RICS) the number of new instructions from landlords dropped towards the end of 2007.
This marked the first downturn for instructions since 1998, with RICS blaming recent restrictions on mortgage lending to potential landlords
RICS said: “Access to the BTL market became harder for would-be landlords as mortgage products became scarce. 1 per cent more chartered surveyors reported a fall than a rise in landlord instructions in the last three months of 2007, compared to the previous quarter.
"The credit crunch has restricted the number of BTL mortgages approved, as well as the number of mortgages available to investors.”
The body added: “While banks remain cautious about offering loans, demand for rental property will continue to increase, with many would-be buyers unable to make the jump to home ownership.
"Established investors continue to reap the benefits of the current uncertainty in the housing market and have been enjoying the fruits of rising rents.”
However Brian Murphy, head of lending at Mortgage Advice Bureau, begged to differ on the report and claimed that the sector was doing well.
He said: “I would say that from our experience the BTL market is still fairly robust as there is a good spread of products with healthy rental calculations. Fees are being pushed up but from our perspective landlords are comfortable with that.
“A lot of valuers are cautious about rental calculations as they are trying hard to be sure that they are not overcommitting themselves.”
