But to let investors could cause housing slump

Estate Agents are warning that UK buy-to-let investors may be creating a slump in the housing market.

15:53 13 May 2004

Estate Agents are warning that UK buy-to-let investors may be creating a slump in the housing market.

Over 2,000 UK estate agents were interviewed in the first quarter of 2004, - they said the cost of renting a home may be falling because so many landlords are putting their property out to rent.

The concerns follow similar warnings from economists who claim that house prices have risen too quickly, inflating an asset price "bubble'" and creating risks to the stability of the UK economy.

"Continuing buoyant investor demand in the buy-to-let market has resulted in excess supply, with downward pressure on rents,'" a summary of the agents' findings said.

"Some contacts were concerned that, while there was little evidence to date of distress, forced selling in the buy-to-let market could lead to a substantial slowdown in the housing market."

The Council of Mortgage Lenders, whose members account for 98 per cent of UK home loans, last week released a report concluding that there are "questions' about the future of the buy-to-let market.

The Bank of England's Inflation Report also noted "doubts" over whether the shift towards more private investors buying property was permanent or temporary.