Tenant demand for rented accommodation is growing strongly on the back of a slowing housing market, higher borrowing costs and the uncertain outlook for house prices and, according to Paragon, this increased demand is creating an upward pressure on rents.

In today’s environment, investors expect to grow the size of their portfolios over the next year by 5%, from 11.5 to 12.1 properties. In value terms, Paragon expects the average portfolio to be worth £1.5m in 12 months’ time.

This on the back of the Royal Institute of Chartered Surveyors’ research that rents are growing at record levels as well as the Association of Residential Letting Agents’ latest report that tenant demand has outstripped supply in all areas of the rental market.

Nigel Terrington, chief executive of Paragon, says: “There is broad agreement that buy-to-let is a beneficiary of a softer housing market as would-be homebuyers defer house purchase and find themselves competing with migrants, students and first jobbers, among others, for a measurable supply of rented homes.

“This private rented sector continues to expand steadily to meet this growth in demand for accommodation, and landlords add to their portfolios in the knowledge that tenant demand is buoyant and rents continue to rise.”