Landlords continue to prosper during difficult time

Research by the Mortgage Trust suggests landlords hope to double their property portfolios over the next five years.

Despite fears that interest rates may prove prohibitive to new purchases many landlords remain positive about the future prospects of the rental market and hope to increase their holdings from an average of two to four properties in the near future.

Director of mortgages John Heron stated: "Some people are sceptical about whether landlords, and small scale landlords in particular, are being squeezed by higher interest rates – causing them to lose confidence in the market."

However, pressure for short-term, cost-efficient housing, principally from students and migrants, is fuelling the market and sustaining demand in the sector.

Students now account for 15 per cent of landlords' tenants, up from seven per cent in January 2007, whereas migrants have seen a rise from three to six per cent over the same period.

Both groups tend to inhabit multiple occupancy houses, which is beneficial to both landlords and their tenants. Whereas landlords receive a higher yield from a single property if it is inhabited by numerous occupants, rents are often lower for the individual tenants if they share a property.

"The prospects for buy-to-let investment remain positive. Landlords are still planning to hold their investments for a long period of time because there is strong tenant demand – particularly from groups that choose to live in shared homes, on which landlords can often get better returns," Mr Heron concluded.