A growing crisis in the buy-to-let sector is leading builders to 'mothball' city centre developments until investor demand picks up. Financial Times

A slump in residential investment demand in areas such as the North and the Midlands is leading to the delay of hundreds of new homes.

Dandara, a city centre building specialist which has about 3,000 homes either under construction or going through the planning process, is to delay the development of the next phase of its land bank in Manchester until existing schemes are sold.

'We will release the next phase of our land bank sometime in the new year,' said Hugh McGuinness, sales director at Dandara. 'It might be a little later now than it would have been.'

Steven Stone, chief executive of Crest Nicholson said: 'The recent tightening of lending criteria by the major building societies has had a material impact on the buy-to-let market, particularly in the oversupplied city centre apartment markets outside London,'

Kevin Cammack, analyst at Kaupthing, said there were two markets. 'There’s been a divergence between the professional and the amateur investors.'

Amateurs who buy small numbers of homes have been 'hammered by the lending criteria, while for the professional [who typically buys 20-40 homes at a time], the money is still there.'