The company has said that it can no longer borrow the amount of money it needs in order to sustain its business. The company has decided to cut the number of buy-to-let loans it offers by roughly half in the coming year. Other banks are expected to follow a similar lead.

Other buy to let lenders have also had to take urgent measures to raise ready cash including Bradford & Bingley which is the UK’s biggest buy-to-let lender.

If there is a shortage of available home loans in the buy-to-let category buyers will be sucked out of the market. This will further decrease demand for housing amongst buy-to-let investors and send prices dropping further. Ironically, this raises the price of rental property, as fewer properties are available to rent.

The statements by both buy-to-let lenders provides yet further evidence that the global credit crunch will take down more victims in a similar manner to Northern Rock. At the moment many banks simply cannot raise any liquidity because inter-bank lending rates are so high.

As a result of a short supply of liquidity many home loan deals are being withdrawn by banks from the market as well as turning away an increasing number of borrows. Borrowers looking for credit cards, personal loans and mortgages will find it increasingly difficult in the coming months to get their hands on credit.

As banks continue to tighten their belts when it comes to lending borrowers are being warned to prepare for rejection when they apply for a credit card. The people that are going to find themselves most likely to be refused are those with imperfect credit histories.

In the recent past it was assumed by most people that only those who had very bad credit histories, recent first time buyers and some buy-to-let investors were the ones who would find it difficult to secure credit. However times have changed in the wake of the credit crunch and more and more people are finding that they too are being rejected for credit.

Customers applying for cards and personal loans are finding that credit scoring has become tighter, with lenders giving more stringent reasons for turning down an applicant. Last year an applicant might have got away with making the odd late payment on a card or loan and it not affecting their credit score, but this year it’s a different story.

It has been revealed that the number of applications for credit cards that are being rejected has gone up by as much as 17% in the past six months. This means that roughly 3.27 million people across the UK have been refused credit in that period. This is a half a million more people than were rejects in the six months leading up to March 2007. Those of us who are most likely to see or application for credit rejected are people in the 25-34 year old age bracket.

Banks are also becoming increasing choosy over who they are willing to lend money to because the pool of money they have to disburse is so much smaller. With so many people looking for bad credit loans or low-deposit home loans, there are going to be a lot of disappointed borrowers.

Keith Astill, managing director of UCB Home Loans, a subsidiary of Nationwide building society, said:

“People are renting for longer because it’s more difficult to afford to buy, which is in turn providing a boost to the buy-to-let sector.”

Halifax claims that UK property inflation is 10.7%. The figure is higher in Scotland, where house prices are have been increasing 15.9% a year.

Higher prices boost the value of the property, but also squeeze yields, decreasing the percentage of house price covered by the rental income. Yields dipped to 5.5% over the past 16 months, from 5.7% in June 2006, according to Birmingham Midshires.

This despite the fact that rents are on a steady increase, with the average increase of 4.5% in the last year to an average of £651 a month.

Tim Crawford, group economist at Birmingham Midshires, said:

“The fundamentals underpinning the buy-to-let sector remain sound. While house price growth is expected to be more subdued near term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long-term investors.

“There also remains the potential for healthy long-term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built.”

Mortgage fraud takes many forms, including stealing property using various methods of deception, obtaining a money transfer by deception, signing mortgages, and selling third party homes.

Victims are left with no hope of proving that they were not involved in the scam and are accused of hide the proceeds of the scam. Most victims hope that they are protected by banks and loan lenders, but sadly this is not always the case.  Many people have been left with 40 year mortgages in their name and what appears to be a history of bad debts and defaults on secured loans.

The Department of Productivity, Energy and Industry (DPEI) closed a buy-to-let scam, in 1995, which promised to help investors make money in the property market.  Three companies linked to the scam ended up at the High Court, following confidential investigations by the DPEI.

These companies took “substantial sums of money” and promised that they would help clients to build a portfolio worth £1 million a year.

In 2005, DPEI Minister Gerry Sutcliffe said: “These companies knew that their clients, who had all invested substantial amounts of money, couldn’t make anything like the returns that were promised. The schemes were completely misleading and set up with the sole aim of parting people from their money.”

Consumers are warned to avoid any investment scheme that promises too much, or very little risk. They are also warned to avoid anything that asks for personal information before explaining the company’s intent.

A new study reveals that almost one third of landlords have less than one year experience. This is no bad thing, but novice investors may be less adept at budgeting for interest payments, taxes, and repairs, on their newly acquired properties.

Adrian Turner, chief executive of the Association of Residential Letting Agents (Arla), said: “Buy-to-let investors are starting the new year in an optimistic frame of mind. Private individuals have taken over as the main drivers of the sector and it is clear that they are here to stay.”

However, rental yields hit a five-year low of 5.74pc in 2006.  Landlord Mortgages, a specialist buy-to-let broker, said that recent buyers face an income crunch as short-term discounted mortgage deals revert to higher variable rates.  This could hit them sooner than expected.

Many have also forgot to take into account that rents will drop, as supply increases, about the same time that their mortgages become more expensive. The bad news increases further for those who remortgaged to finance repairs or took out a secured loan against the property to pay for improvements.

Lenders are tempting new landlords with buy-to-let mortgages with rates of 3.99pc. But after the expiry of incentive periods, the cost typically rises to well above the average rental income yield. Leaving the landlord paying out more money than is taken in.

Adrian Turner said: “This new breed of landlord understands that residential property investment can, and must, take account of the ups and downs of the sales and the rental cycles. They are not spooked by scare headlines about housing.”

Despite recent interest rate increases, the buy-to-let market remains active, according to Paragon, a leading mortgage firm.

Paragon said that landlords are still planning to increase their property portfolios, and were to increase the value of their portfolios by 4.8 per cent in the next year.

The firm has seen a “sustained” growth in rent in  the past quarter.  Rents rose from £9,665 in November to £10,334 in February, an increase of 6.9 per cent. This will bolster the buy-to-let market, even for investors who are planning on securing loans on their current properties.

“Suggestions that buy-to-let activity is influenced by fluctuations in interest rates, with business going up when rates fall and going down when rates rise, is unfounded,” commented chief executive of Paragon Nigel Terrington.

Birmingham Midshires predicted that the buy-to-let market will account for one fifth of all new homes purchased by property investors in 2007.

Many consumers took the plunge into the buy-to-let market last year, hoping that the soaring house prices would improve the rental market.  For most, the risk paid off handsomely.  Even those who borrowed homeowner loans to finance their portfolio growth have seen a profit.

House price expectations are at their highest since April 2004.  Market experts predict that the post-Easter boom will improve the market even further.

The research revealed that 75 per cent of all new landlords expect to keep their buy-to-let property for five years or longer. However, only 26 per cent think they will keep their first property investment for more than 15 years.

Many of today’s buy-to-let landowners are speculating on good returns on the housing market, as opposed to becoming long-term landowners. Survey respondents expect their portfolios to increase by a factor of three in the next decade.

However, there is little information to reveal, accurately, whether the respondents are small time investors with one or two properties, or the conglomerates with millions tied up in their portfolios.

The high tenant demand has forced rents up by 6.9 per cent in the last three months alone. Landlords expect to increase their portfolio and are confident that they will generate enticing income levels that they can reinvest.

Managing director of Mortgage Trust John Heron said: “There is continuing confidence in prospective house price growth and the rewards that can be achieved from capital gain on a property, as well as the rents achievable in the shorter term. All in all, the total returns achievable on a buy-to-let portfolio are an attractive prospect for investors.”

Research from the Homebuyer Show suggests that 47 per cent of landlords are looking to expand their portfolio this year. This is good news for private homeowners, showing that the housing market is still buoyant and encouraging for those looking to take out homeowner loans for home improvements.