They are property investors who took out large mortgages towards the end of the boom, typically interest only, and often buying city centre apartments where prices have since collapsed.
Rating agency Standard & Poor's has found that over 50% of buy-to-let loans were taken out during 2006 and 2007 when lending practices were at their most generous. Typically, a buy-to-let borrower took out an 85% loan, leaving them at risk if property prices fell just 15%.
It believes that up to four in ten of buy-to-let borrowers will owe more on their mortgage than their property is worth by next June if property prices fall by between 25% and 30% from their 2007 peak.
In comparison, it says, only around 14% to 20% of owner-occupiers will be in negative equity.
Most new landlords, some 88%, took out interest-only loans, not paying off any of the capital and overall there are more than 1.1 million buy-to-let mortgages in the UK, accounting for 11% of the mortgage market.
They also face a higher risk of repossession and tenants could face a hurried termination of their contract as a result. Also if the property they are living in is repossessed it could be sold to an owner with no plans to let it out.
'We believe that the buy-to-let sector could suffer above-average loss severities on repossession cases due to a concentration of certain property types that are witnessing above-average price declines,' explained Kate Livesey, an analyst at Standard & Poor's.
