Nathalie Knowles BBC Radio 4

The rental market slumped at the end of the eighties when people were encouraged to buy their own homes.

With so much money to be made by owning a property many felt the age of renting was over.

But boom led to bust and with the recession came renewed demand for rental properties as people paused to take stock, scared by volatile markets and stories of negative equity.

The Housing Act of 1988 had deregulated the rental market, providing a legal framework which appealed greatly to potential landlords.

The Act encouraged a surge in rental properties in time to meet the growing demand caused by the recession.

Risk reduction

In 1997 another change in the law made it easier for landlords to regain possession of their properties, reducing the risk of being saddled with a sitting tenant.

This move persuaded mainstream lenders to provide cheaper and easier loans to potential landlords.

And it was the 'buy-to-let' mortgage initiative that revolutionised the market.

Before the initiative it could be difficult and expensive to get a mortgage for a property you wished to rent out.

Property investors were often forced to buy at commercial rates.

And any potential rental income was not taken into account when the lender assessed suitability for a mortgage.

The initiative was devised by the Association of Residential Letting Agents and supported by a panel of leading lenders.

Stimulating growth

The aim was to stimulate growth in the private rental sector by encouraging investors to enter the market at a time when rates were low and capital growth looked a reasonable certainty.

Buying a property to rent out had never been easier and the future looked rosy.

Thousands were seduced by the idea of buying a second property and making money from it.

The rent could pay the mortgage and capital would be building up in the background as house prices increased.

And for many the increase in the value of their property was dramatic.

House prices rocketed by up to 90% in the last six years alone, according to figures from the Nationwide Building Society.

Investment opportunity

With better legal protection, sympathetic lenders, low interest rates and experienced letting agents willing to manage your property, many saw it as an opportunity not to be missed.

Yet, ironically the popularity of buy-to-let could end up being its downfall.

Nobody predicted the staggering growth in buy-to-let loans.

In 1999, 44,400 buy-to-let loans were given out for residential properties.

In 2000 this figure had jumped to 48,400. And in 2001 the annual total was 72,200 loans, worth an impressive �6.9 billion.

The number of lenders willing to get involved has also risen.

The figure currently stands at 70 mainstream and specialist mortgage suppliers with buy-to-let loans making up 10% of the entire market.

Falling rents

Currently, some 2 million UK households rent through the private sector.

But in some areas there is now a surplus of rental properties available. And rents are falling.

The rising house prices of the last few years have sucked tenants out of the rental sector as they rush to get on the housing ladder before it is too late.

In some areas, finding a tenant has proved a headache for landlords and their empty property has eaten away the profit.

The Royal Institute of Chartered Surveyors has described the situation very simply as "too many landlords chasing too few tenants".

And Economist Roger Bootle warns "The whole buy-to-let phenomenon has... many of the characteristics of a bubble...

The biggest mistakes in investment are made by assuming it is right to do something now, which was right five years ago. I think it's the wrong time, the bird has flown."

But with the housing market still roaring ahead while the stock market stagnates, more and more investors are tempted to pile in to property.

If tenants remain elusive and house prices start to slow, it is not clear how many of them may regret jumping on board the buy-to-let bandwagon.