Back in December, the Portman Group made the decision to stop lending on newly built property for the buy-to-let market, writes David Lawrenson.

This meant the group would not lend on off-plan properties as well as those less than 12 months old.

Matthew Wyles, the Group Development Director at the Portman, who lend on buy-to-let through their Mortgage Works subsidiary, said "Dubious valuations of new flats were becoming "endemic" and that "Valuation had become "more of an art than a science" because of the current oversupply of new flats."

The problem as the Portman sees it was that developers sometimes do deals with buyers which are outside the formal contract.

This meant that the lenders were often unaware of the real price being paid.
So a buyer would negotiate a discount of say 20% on the price. The mortgage lender would be unaware of this. The buyer's mortgage would be based on the full value, so he is effectively buying the property with "no money down."