Research by specialist buy-to-let lender, Paragon Group, has revealed that landlords are expecting tenant demand to continue to remain high in 2012.

More than half (56%) of the landlords who took part in the quarterly survey said that they expect tenant demand to either grow or boom in the New Year, which compares to 45% who were asked the same question at the end of 2010. Only 6% of those questioned thought that tenant demand would decline in 2012.

When asked whether they thought rental income would increase during the next 12 months, 45% of landlords surveyed said that levels will increase, whereas 53% said that it would remain stable – only 2% said that it would decrease.

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Over the coming year, two thirds of landlords said that they thought arrears levels would stay stable and 20% said that they thought arrears would rise moderately.

Nigel Terrington, Chief Executive of Paragon Group, said: "It is no surprise that landlords are expecting a healthy level of tenant demand in the New Year, based on the levels of demand we have seen steadily increase throughout the past 12 months.

"2011 was certainly a good year for the buy-to-let market, with not only increasing tenant demand but landlords investing in their portfolios, low levels of arrears and more available finance.

"With the success of 2011 to build on, I believe the private rented sector will continue to perform and provide a valuable tenure choice for even more people in 2012.

"This year will bring its own challenges, especially with the uncertainty in Europe and the wider financial markets affecting overall confidence levels. But I believe that the foundations that we laid as a sector in 2011 will allow lenders and landlords to continue to do business, in particular if we see a greater level of product innovation. We should look to 2012 with optimism as it is sure to bring further opportunities."

(GK)