Landlords who are new to the buy-to-let market have been warned not to go for mortgages that do not specify that the rental yield from the property must exceed monthly repayments on the loan.

A specialist mortgage company has suggested that only experienced landlords with large portfolios should take the gamble of buying a property to let where the rent only just covers repayments. The growing number of buy-to-let loans that do not require the usual 125% of monthly payments rent cover could cause problems in the future and lead to a rise in repossessions of let property according to this provider.

Buy-to-let is becoming a harder game to play recently due to the sharp rise in property prices and interest rates outstripping that of rent rises. This is a contributing factor to the proliferation of buy-to-let deals where 100% coverage is offered to those potential investors with good credit ratings or to those who could cover a shortfall with their own income.

There is a fear that these offers are setting 'financial' traps for the novice landlord who must hand over their entire rental income every month to cover the repayment - this means that if there are problems obtaining the rent then arrears may occur. In case of the worst case scenario it is a good idea for landlords to keep a 20% reserve back if possible in case the worst happens.

Currently some landlords are willing to cover rental shortfalls in the hope of future capital growth in property prices will still see them with a profit upon a sale. There are many investors who cannot find suitable properties at the moment where the rent commanded can cover the mortgage which has led to many being squeezed financially.

A spokesperson for the company stated:

"100% mortgages should only be lent to landlords with the necessary experience; a portfolio of 25-plus properties, or a portfolio worth over £5m, which should have been amassed over three years or more,' he said. 'To give them to people with minimal experience is short-sighted on behalf of the lender."

He suggests that a glut of repossessed buy-to-let properties could cause problems for the housing market in the long term.