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Tenant demand continues to be strong in the private rented sector, with over a third of landlords currently experiencing growing demand for their property, according to buy to let lender Paragon.

It has found that landlords expect this level of demand to continue over the coming 12
months – four out of ten landlords asked are even predicting that tenant demand will be higher than current levels.

It also found that the average yield across a landlord’s portfolio currently stands at 6.1%, although nearly a third of respondents are obtaining yields above this level – this is crucial, because right now all buy to let lenders are interested in is rental yields.

Looking forward, landlords who talked to Paragon believe the yield across their portfolio will have risen to 6.3% in 12 months’ time as a result of stagnant house prices and rising rent levels.

John Heron, Paragon managing director says: "There are opportunities for residential property investors with cash to spend to expand their portfolios in the current market and maybe we are starting to see evidence of this. This doesn't necessarily mean that investors think that we have reached the bottom of the housing market. It is more likely that they are spotting bargains in local markets and are purchasing with a long-term view."

If you are not as confident about your buy to let investment and the yields you are making, then talk to your adviser about moving onto another mortgage deal. You may find you could make some substantial savings and really increase the profitability of your property investment.

SOURCE: Paragon Mortgages, 03/02/09

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