almost 50% of landlords report increase in tenant demand

The research shows 49% of landlords experienced growing levels of demand during the period, up from 40% in Q4 2010 and compared to 5% who said it was falling.

Furthermore, 52% of respondents expect demand to increase over the next 12 months, with just 6% predicting a decline.

Nigel Terrington, chief executive at Paragon Group, says: “Landlords are experiencing high levels of tenant demand, and this is expected to rise due to a number of factors, including social housing reforms, lifestyle choices, low numbers of first-time buyers and wider demographic changes.

“We are seeing evidence that strong tenant demand is feeding through to higher rents. A lack of available mortgage finance is restricting the sector’s ability to expand and needs to be addressed to create a healthy and vibrant buy-to-let market in the UK.”

The report also shows that 64% of landlords said availability of finance was limited, while average yields increased to 6.2%, their highest level since Q4 2009.

Terrington adds that landlords have experienced a positive start to the year and their prospects for 2011 and beyond are high.