Buy-to-let bubble buoyant but troubled

Bradford and Bingley has said that despite a slowing mortgage market the buy-to-let market is buoyant.

In a trading statement the buy-to-let mortgage specialist announced it expects to make profits of £377 million this year, while reporting that net residential lending in the first half of the year almost doubled from the £2.4 billion a year ago.

However, one leading City commentator told the Evening standard that the buy-to-let bubble was going to burst.

James Hamilton, banking analyst at Numis Securities, told the paper: "A lot of people have made very good money in the past from buy-to-let. But if the housing market goes flat, there is every likelihood that many of them will want to sell up."

He added that if the market goes flat some investors who have concentrated their capital in houses could lose their assets.

"If it all goes wrong they could claim there is an issue of mis-selling, which in turn could lead to political pressure for the Office of Fair Trading or the Financial Services Authority to investigate," he said.