The latest PRS Trends Survey from Paragon Mortgages shows that landlords are now achieving an average gross yield of 6.5%. This is an increase on Q1 earlier this year when the average was 6.2% and a year ago when the average was also 6.2%.

Professional landlords achieved a higher average yield than the smaller-scale landlords who responded to the survey, as they achieving gross return of 6.9% - compared to 6.5% three months earlier in Q1.

When asked for their views on current tenant demand; 55% of landlords said that, demand appears to be stabilising. However, more than a third (36%) believe that tenant demand is growing. Professional landlords are more likely to think that demand is increasing, - 39% compared to 27% of smaller-scale landlords and 44% expect tenant demand to increase over the next 12 months.

The survey shows that a fifth of landlords (21%) are planning to purchase buy-to-let property in the third quarter of the year.

John Heron, managing director of Paragon Mortgages, said: “Strong tenant demand has continued to place upward pressure on rents and we have as a result seen yields strengthen despite the pressure on consumers.

“It is no surprise to see that more experienced landlords achieve better yields with this being driven by their choice of property type and their approach to management.”