The phenomenal rise of buy-to-let could be about to grind to a halt with property experts warning it has become a 'rich man's game'.
A new report by the Royal Institution of Chartered Surveyors (Rics) says residential property investing has become inaccessible to the average person, due to high house prices and more expensive mortgages.
The influential body said a would-be buy to let investor would need to secure a deposit of 30% of a property's value to match traditional lending standards.
Typically buy-to-let lenders have required that the monthly rent covers mortgage payments by at least 125% and have demanded at least a 15% deposit.
This has left a potential landlord needing a deposit of £65,000 for the average home – compared to just £10,100 five years ago.
David Stubbs, Rics senior economist, says: 'It takes more capital than ever to set up a buy-to-let investment.
'Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined.
'However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones, and this should ensure that demand from the buy-to-let sector does not dry up entirely.'
Buy-to-let has risen rapidly since the term was first coined just over a decade ago, with house prices rising by 285% over that period, according to Halifax.
Figures from the Council of Mortgage Lenders show there were 938,500 buy-to-let mortgages outstanding in the first half of 2007, worth £107.8bn, compared to 120,300 loans worth £9.1bn during the same period of 2000.
But while landlords who have been invested in buy-to-let over the long and medium term have seen strong gains thanks to house price rises, those entering the market now struggle to make ends meet.
This has led to a number of lenders relaxing their criteria. They are allowing landlords to borrow on the basis of their personal income and purchase property with less cash up front.
However, experts warn that novice landlords should aim to stick to the traditional criteria applied to buy-to-let borrowing.
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