All is not well in the world of buy-to-let, according to one expert…

James Hamilton, banking analyst at Numis Securities, said: 'A lot of people have made very good money in the past from buy-to-let. But if the housing market goes flat, there is every likelihood that many of them will want to sell up.'

Hamilton warned that there were massive potential problems because many individuals have invested huge amounts of their total wealth in buy-to-let. 'Some retail investors have taken the very high risk strategy with such a high concentration of their money in a single asset class.

'If it all goes wrong they could claim there is an issue of mis-selling, which in turn could lead to political pressure for the Office of Fair Trading or the Financial Services Authority to investigate. '

Bank rejects warning

His remarks came in the wake of Bradford & Bingley, the specialist mortgage bank, reporting a near doubling of net lending in its first half and predicting that the buy-to-let market would continue to outperform the rest of the mortgage market not just in the second half but beyond. It said full-year profits will be at the top of City expectations at around £377m.

But the bank rejected Hamilton's warning. 'Hypothetically he's right,' said a source close to B&B. 'But that's not what the trading statement is saying. Of course, if the buy-to-let market goes into meltdown B&B would be in trouble but then we'd all be in trouble.'

Another analyst, Alex Potter of Collins Stewart, warned that the buy-to-let market had yet to feel the shock felt by borrowers who are coming off fixed-rate deals.

Source: http:///www.thisismoney.co.uk