Britain’s biggest lenders are tightening their criteria on buy-to-let mortgages, depriving would-be investors of the chance to take advantage of plummeting prices and record-low interest rates.

Nationwide-owned The Mortgage Works, the market-leading buy-to-lender, said this month it will refuse applications from “property developers” — cutting off thousands of landlords from remortgage deals next year.

It said it would not accept applications from someone who owns 25% or more of a property- development business.

Abbey also said landlords who want it to take account of buy-to-let income on residential-mortgage applications will have to prove rent covers 125% of repayments with the interest rate pegged at 7% — rather than the rate actually paid.

Melanie Bien, of Savills Private Finance, the broker, said: “Abbey is sending out a clear message that landlords are no longer welcome. By refusing to offer any new or remortgage buy-to-let deals, and implementing draconian rental covenants for those taking out a residential mortgage who have buy-to-lets in the background, it is making itself very unattractive to anyone with buy-to-let property.”

HBOS-owned BM Solutions, the biggest buy-to-lender after Bradford & Bingley (B&B) retreated from the market before collapsing in October, demands a deposit of 40% on its best deals.

In 2007, HBOS was offering deals to landlords with deposits of just 15% — while B&B-owned Mortgage Express was offering deals at 90% of the value of the property.

Just 27 out of 94 lenders offer buy-to-let mortgages, according to a survey by Chase de Vere Mortgage Management.

The best rates for landlords are about 1.5% higher than residential mortgages and landlords should expect fees of around 2.5%.

The best buy-to-let two-year fix from The Mortgage Works at 4.99% with a fee of 2.5% is only available to borrowers with a 30% deposit.

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