Ambitious buy to let landlords are finding it more difficult to expand their portfolios of properties as banks like Lloyds, which includes HBOS, impose new borrowing limits.

Last week Lloyds announced that its lending to landlords would be capped at £3 million and a maximum of 9 properties. Prior to this announcement, the bank would have lent £6 million on as many as 18 properties. It is not known how this will affect landlords who need to refinance their portfolios as their existing finance deals come to the end of their term, but presumably these landlords will have to diversify their borrowing to new lenders. Whether they will find new willing borrowers will depend on the equity within their property portfolios.

This move by Lloyds is another symptom of the finance sector wishing to diversify and reduce their exposure to the buy to let market which has been so badly hit during the current recession. Many landlords invested heavily in city centre apartments only to see the value of these properties fall by 50 per cent in cities such as Leeds, Manchester and Bristol.