The amount of privately-owned rented accommodation in the UK could shrink by almost 70% over the next few years, as more investors flee the buy-to-let market and release up to £18bn, a report from savings group Skandia predicted yesterday.

The amount of privately-owned rented accommodation in the UK could shrink by almost 70% over the next few years, as more investors flee the buy-to-let market and release up to £18bn, a report from savings group Skandia predicted yesterday.

Skandia, a unit of insurance group Old Mutual, predicted that sliding resi-dential property prices, higher mortgage costs and sluggish rental growth will drive many aspiring land-lords from the buy-to-let market, releasing a sizeable chunk of the private investment capital that had gone into property speculation in recent years.

The report noted that the market was likely to contract sharply after a period of extraordinary growth and would revert to historical levels, without specifying the time frame.

However, it noted the stock of buy-to-let mortgages had collapsed to £44bn from £120bn at the end of 2007.

Skandia cited data from the Council of Mortgage Lenders to show the stock of UK buy-to-let mortgages was just £2bn in 1998, since when the market had grown to about one in 10 of all UK mortgage loans from less than one in 100.

Skandia said falling house prices - the market is about 10% down from last year's peak levels - plus higher debt costs in the wake of the global credit crunch and sluggish rental growth would lead to greater numbers of landlords selling properties.