Rising demand for rental accommodation continues to drive the buy-to-let sector, according to Paragon Mortgages.

The mortgage lender reports that rental incomes rose by 2.39% in the month to June, yet Paragons July buy-to-let index predicts that landlords are set for further gains.

John Heron MD at Paragon Mortgages said: "Housing demand is growing, with more single person households, higher numbers of students as well as the effect of immigration.

"The Department for Communities and Local Government forecasts 209,000 households need to be formed per annum, with immigrants accounting for perhaps a third of new households.

"Such newly formed households are most likely to live in rented accommodation [and] in response to this growth in demand for rented properties, landlords are actively building their portfolios in all parts of the country.