Almost 100% of landlords surveyed by buy-to-let lender Paragon Mortgages found that tenant demand is currently stable or growing.

Landlords who took part in the quarterly survey also reported an average yield across their rental portfolio of 6.2%, a slight increase on Q1 when the average was 6.1%.

The average yield has remained around this level for the past 12 months. In the second quarter 38% of landlords said that they were feeling more optimistic about the prospects for their rental portfolios.

56% of landlords stated that there had been no change in their views, and just 4% said they were feeling pessimistic about prospects. Looking ahead, 16% of landlords are planning to add to their rental portfolios during the third quarter. There has been no change in the types of property landlords are planning to invest in, with terraced houses remaining the most popular with 55% (of those expecting to buy) choosing this property type.

There has been a slight increase in popularity of detached houses, with 15% of landlords expecting to buy this property type compared to 12% last quarter. 72% of landlords said that they thought rental arrears levels would remain stable in the next year, only 11% expect levels to increase. Overall, the feedback from landlords suggests that only marginal movement in tenant arrears is predicted.

John Heron, managing director of Paragon Mortgages, said: “It is interesting to see the improvement in confidence amongst landlords in the PRS. We are seeing much more activity in the private rented sector and, in turn, the buy-to-let market as a result of continuing strong rental demand and the investments made by landlords.

“Tenant demand is clearly staying very healthy, and this is likely to remain a common trend over the coming months, particularly as we are still not seeing the level of house building that the wider housing market so desperately needs.”