According to Moneyfacts, more than half of buy-to-let deals for landlords with troubled credit histories have vanished in the past month, sparking fears that many investors may be forced to sell their investments.

There were 1,383 sub-prime buy-to-let deals in July and now there are only 149. Only four relatively unknown lenders remain in the market including Preferred Mortgages, Edeus, Manchester Building Society and Pink which is funded by The Mortgage Works.

This means that investors who need to remortgage may no longer be offered attractive rates and will be forced to pay the standard variable rate.

The decline in the sub-prime residential market has also continued, with the number of deals falling a further 20% since October. There are now 63% fewer of these rates on the market than before the collapse of the US sub-prime market.
Julia Harris, analyst at Moneyfacts. co.uk, said: “With the sub-prime buy-to-let market already virtually destroyed, it surely cannot sustain much more pressure before it vanishes. In less than a year, the sub-prime market has grown, flourished, and is now wilting fast.”

The fall in sub-prime residential and buy-to-let deals comes shortly after Kensington Mortgages, which specialised in the market, pulled out. Kensington Mortgages also funded Bank of Ireland’s sub-prime operation. Moneyfacts called for lenders to take a radically new approach to the sub-prime market. However, the Council of Mortgage Lenders (CML) said the problem is to do with funding, not features of mortgage deals.