The number of landlords reporting growth in tenant demand has risen in the third quarter of the year, according to fresh research from Paragon.

The buy-to-let mortgage lender’s latest PRS Trends Report for Q3 2019, found that 29 per cent of all landlords witnessed an increase in demand from tenants in the last quarter, which is the highest proportion in almost a year and the first consecutive quarter of growth since Q4 2017.

The research also revealed that portfolio landlords continue to drive an increase in portfolio size and value, with the overall average portfolio now at 13.2 properties and worth £1.82m – the second consecutive, record average value.

But despite a more optimistic demand outlook, many landlords continue to adopt a cautious approach to their investments, with average gearing remaining historically low at 33 per cent loan-to-value and mortgage payments as a proportion of rent unchanged in Q3 2019 at 25 per cent.

John Heron, director of mortgages at Paragon, commented: “A clearer picture is starting to emerge of the impact that multiple government and regulatory interventions are having on the PRS.

“In broad terms, landlords have been buying fewer properties and selling more at a time when there has been a resurgence in tenant demand.

“RICS reported a similar trend in their August residential survey and it is widely anticipated that this will lead to reduced choice and higher rents for tenants. This is probably not the outcome that policy makers were looking for.”