Buy to let lenders are making it harder for potential investors to enter the market, with many reducing maximum loan amounts and withdrawing competitive rates.

Bank of Scotland, BM Solutions and The Mortgage Business, all part of the HBOS group, fell into line with a number of other lenders by announcing they would curtail lending on new build flats.

All groups reduced the maximum loan-to-value they woulf offer on new-build rental flats and apartments from 85 per cent to 75 per cent. They also removed most of their best fixed and tracker mortgage deals.

Other groups that have stopped lending in this area include Nationwide and Chelsea Building Society, while Abbey temporarily withdrew from the market via intermediaries. A number of lenders cut their maximum loan-to-values to 50 per cent on new build flats.

David Hollingworth fro London and Country Mortgages said, "Everyone has been showing a much reduced appetite in this area due to issues around the transparency of builders' incentives, the real value of the properties and major fraud.”

Mortgage brokers said it had become extremely difficult for property investors to enter the buy to let market unless they were willing to part with a deposit of at least 25 per cent.

Price comparison website Moneysupermarket.com released figures yesterday that showed the number of buy to let loans fell from 4,025 to 674 in just one year, with nearly 600 of these being removed since the end of March.

The buy to let market undoubtedly slowed since the credit crunch with lenders asking for deposits of at least 25 per cent. Mortgage brokers said it was now getting very difficult for property investors to enter the buy to let market.