The era of the amateur landlord has all but ended, with banks effectively refusing to lend to new entrants to the buy-to-let market.

Thousands of existing landlords also face huge increases in the cost of remortgaging, experts said yesterday.

The warning came as HBOS, Britain’s biggest group of lenders, imposed the third increase in the cost of residential mortgages in as many weeks. Cheltenham & Gloucester, the fourth-biggest lender, also increased some of its rates for the second time in three weeks.

First-time landlords, including parents eager to buy a house for their student children, will now find it almost impossible to enter the housing market.

Lenders have stopped offering buy-to-let loans or severely tightened their lending criteria for prospective landlords and many of the existing one million buy-to-let mortgage holders approaching the end of their terms.

The development comes as senior figures in the housing industry predict up to two years of declining house prices. The problems in the buy-to-let market are compounded by fears that the target of many would-be landlords – apartment blocks in cities such as Birmingham, Manchester and Cardiff – are facing a rapid decline in their value.

Katie Tucker, of the broker John Charcol, said: “After another week of turmoil in mortgage markets, novice landlords now face huge difficulties securing a loan, and thousands of existing landlords coming to the end of fixed-rate deals will find it very hard and very expensive to switch mortgage providers if they have not built up at least 75 per cent equity in their buy-to-let property.”

This week Abbey withdrew virtually its entire range of buy-to-let mortgages, leaving only an expensive fixed-rate deal of 6.99 per cent for direct customers.

Chris Wood, of the National Association of Estate Agents, said: “It’s the amateur investors who are feeling the pinch. With lenders worried about falling house prices, prospective borrowers without a substantial deposit will find it very tough to get a buy-to-let loan.”

HBOS, owner of Halifax, Intelligent Finance, Bank of Scotland and Birmingham Midshires, heaped further misery on homeowners with large increases on mortgage interest rates and arrangement fees last night. It was the third time in as many weeks that the lender, which has more mortgage customers than any other bank, has announced an increase in rates.

Halifax is expected to raise fees by £1,000 and some rates by as much as 0.6 per cent, meaning an increase of £75 a month on a £150,000 interest-only loan. The bank increased the rates on some of its tracker deals by similar margins last week, and increased the rates on mortgage deals for those with small deposits by up to 0.35 per cent on April 7.

Intelligent Finance, the online lending arm of HBOS, increased the rates on its deals by up to 0.45 per cent yesterday and introduced a fee of £12,000 on a 7.49 per cent tracker deal for properties over £2 million.

Mortgage brokers also suggested that more rate rises could be on the way, despite the Bank of England’s £50 billion bailout for British banks.

Ms Tucker said: “If HBOS are suddenly pricing themselves out of the market under all brands, it implies that they don’t want to part with their current available cash, or that they have been swamped with business this week. This price hike will displace a huge amount of business, swamping other lenders, so there’s a good chance the rest will follow suit next week.”

The mortgage market is shrinking rapidly as lenders withdraw products and tighten lending criteria. But experts say that landlords are among the people worst hit by the market woes.

Last April there were 2,990 buy-to-let mortgage products available, with an average rate of 5.23 per cent. Today there are 597 products, with an average rate of 6.75 per cent. Some specialist lenders, including Mortgage Trust and Paragon, have stopped offering buy-to-let deals altogether.

Last year lenders would loan up to 90 per cent of a buy-to-let property’s value (LTV), but most landlords now need to raise a deposit of 25 per cent to obtain a mortgage. Landlords have also been hit by lenders’ demands for increased rental cover — the amount of rent that covers the mortgage. Last autumn landlords only needed 100 per cent rental cover but lenders are now insisting on 120 or even 130 per cent.

Average rental yields — the return on capital — have also been falling steadily over the past six years. In the second quarter of 2002, the average rental return was 6.8 per cent, but this fell to 5.8 per cent in 2003 and reached a low of 5 per cent in 2005. In the first quarter of 2008, the average annual rental yield was only 4.66 per cent, according to the Association of Residential Letting Agents.