Confidence in the private sector is on the up, with nearly a third of landlords reporting rising tenant demand and one in five planning to invest in the next quarter, according to Paragon Mortgages.
Paragon's survey revealed that 29% of landlords saw tenant demand increase in the second quarter of the year, compared to 10% who reported a fall.
This is up on the first quarter of the year when 24% of landlords saw rising demand and 8% saw a decrease.
The majority of landlords (54%) said that tenant demand was stable during the second quarter, while 7% said they were unsure which direction demand was heading.
Paragon's figures showed that landlords are confident that tenant demand will continue to strengthen, with 35% expecting demand to be higher in 12 months, while 8% forecast a decline.
This confidence is also reflected in that 21% of landlords surveyed intend to invest in further property during the third quarter, compared to just 12% in the last quarter.
However, securing buy-to-let mortgage funding continues to be a problem, with over half finding it more difficult, while just 13% said it was easier.
Nigel Terrington, chief executive of Paragon Group, said:
"Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios."
He added: "There is obviously a dislocation between landlords' intention to purchase and their actual ability to do so given the continued scarcity of buy-to-let mortgage finance.
"However, our survey confirms that landlords still value residential property as an investment vehicle."
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