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Buy-to-let property investors have been hit by the mortgage credit crunch  according to new figures released from UK lenders.

New buy-to-let mortgages fell to 144,600 in the first half of 2008, an 18% drop compared to the previous six months, and the first fall for over three years.

The Council of Mortgage Lenders said landlords faced the same issues as homeowners during the credit crunch.

Rents are unlikely to fall as demand for BTL rentals remains high.

“We expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now,” said CML director general Michael Coogan.

Many buy-to-let investors rely on the wholesale markets, which have dried up during the credit crunch as banks have scaled back on lending to one another.

As a result, the number of new buy-to-let mortgages in the first half of the year fell.

But the decline was not as steep as had been expected in the  mortgage market - which saw a 28% drop in home loans in the first half of 2008 compared with the previous six months.

Buy-to-let mortgages borrowers also had to find a slightly bigger deposit for their homes, in the same fashion as other mortgage borrowers.

The average loan was an 83% loan-to-value offer during the first six months of the year.

The CML data shows that Birmingham Midshires has the highest gross lending in the UK market.

Some landlords have been unable to raise rents in the short-term as mortgage costs have risen, pushing more into the position where they are having homes repossessed.

Some 0.16% - or 1,800 out of more than one million - buy-to-let homes were repossessed during the first six months of the year, up from 0.11% during the previous six months.