There has been a significant rise, in the prices landlords have been paying for their investments, say Paragon Mortgages. Paragon say the rise is largely due to a flurry of activity by large-scale landlords acquiring additional student lets in advance of the new academic year.

Property values increased by 2.8% or £4,265 over the month, according to the latest Buy-to-Let Index. Average property values are now £156,887, compared with £137,112 in May 2004, representing a 14.4% increase over the past 12 months.

John Heron, managing director of Paragon Mortgages, comments: "Weve seen landlords buying properties in several of the UKs university towns, particularly in the northern half of the country. To meet the needs of student sharers, landlords typically buy larger properties with four or more bedrooms which, of course, tend to be more expensive than medium sized properties for occupation by families. This growth in buying activity among landlords specialising in the student market accounts for the significant rise in average property values recorded this month."
"A significant number of landlords concentrate on the student market, with many university towns and cities experiencing a shortage of decent accommodation for students. With four or five student sharers in a property, the return to the landlord can often be very attractive."