A leading survey of landlords has shown that over half are confident that demand for rental properties will increase.

Paragon Mortgages' trends report found that 54 per cent of the 200 questioned believe tenant demand will continue to grow over the next year, as difficulties in securing a mortgage force many people to rent rather than buy.

Managing director John Heron said potential buyers are "uneasy about the current market", adding: "Combined with strong demand from students, immigrants and people that choose to rent as a lifestyle choice, this is putting an increased strain on the private rented sector's stock."

Only five per cent of landlords surveyed predicted a decline in demand over the next 12 months.

Bank of England governor Mervyn King this week said that activity in the housing market would slow down, though he could not predict how long it would be before a recovery sets in.

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