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A new study by Moneynet says for anyone thinking of becoming a landlord in 2009 they will be faced with an almost unrecognisable market compared with the one that existed in September 2007.

Since the onset of the credit crunch mortgages have become rarer, banks have turned their back on lending and all the hope that property bought people over this decade seems to have been lost. Whilst house prices may have fallen and base rate slashed to just 0.5%, many lenders no longer have an appetite for buy-to-let and those that remain have tightened their criteria considerably.

Andrew Hagger from Moneynet says: "Whereas 18 months ago you would have been faced with nigh on 100 lenders to choose from and needing a deposit of just 10% or 15%, the choice of loans has shrunk rapidly with barely 30 lenders operating in this field, with those that are left demanding a minimum 30% or 40% stake from would be landlords.

"Whilst Buy to Let can still prove to be a profitable medium to long term form of investment, we are now seeing a more realistic financing requirement. Unfortunately it was a decade of booming house prices and a ‘me too' mentality to make a quick buck that has seen both borrowers and lenders get their fingers severely burnt."

Moneynet says too many people got carried away with hearing how others were raking in the monthly rental income but without appreciating the potential pitfalls or having the financial back up to cope when things didn't go according to plan. But people were sucked in by the bubble and the media scum surrounding property investment.

Unfortunately now, if unemployment issues result in tenants being unable to keep up the rental payments some landlords will be faced with the situation of having to sell the property in an adverse housing market. This means they may losing their initial stake and in some cases ending up with a residual debt into the bargain.

The UK property market is very, very tough right now, there is no doubt about that. And buy-to-let investors who maybe did not do their homework a few years ago are now facing the prospect of losing money. That's why a mortgage adviser is so vital for anyone who is a landlord right now. A mortgage adviser will help buy-to-let investors with their loans, their debts and their prospects.

SOURCE: Moneynet, 01/05/09

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