If housing affordability is such a big issue in the UK, why does every man and his dog seem to be a landlord these days? Buoyed by rising prices and low interest rates, the growth in private residential investment has been extraordinary. In 1999, the total number of buy-to-let mortgages was 73,200. By the end of last year, it had leapt to 850,000, according to the Council of Mortgage Lenders. Specialist lenders, such as Bradford & Bingley and the now-troubled Paragon, have been making hay, with about a quarter of net new mortgages in the first half this year going to buy-to-let borrowers.

But the party is over. For starters, the numbers no longer add up. Net rental yields are now below financing costs and are likely to stay there. That means landlords have to support their investments from other sources of income while praying that capital values rise. Already, demand for buy-to-let mortgages is slowing and in the third quarter 6 per cent of landlords with tenancies up for renewal chose to sell instead, a third more than a year ago. Lending criteria have been tightened and the credit squeeze has gummed up funding via the wholesale markets and securitisation.