A survey by Paragon Mortgages has found the majority of buy to let landlords expected tenant demand to remain strong over the coming months.

Statistics from the survey showed that 54 per cent of landlords thought demand would rise as void periods fell to their lowest level since 2005.

Significant growth in the need for rented properties comes as house prices begin to fall, resulting in less buyers willing to make a purchase and mortgages becoming scarce due to the credit crunch.

John Heron, managing director for Paragon Mortgages, said: "We have consistently said buy to let had strong counter-cyclical qualities and we are now seeing concrete evidence of this.

"Potential home buyers are postponing purchasing decisions because they either feel uneasy about the current market or they simply can't get a mortgage, so they are renting."

Demand for rental properties was also strong among 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," Mr Heron said.

"It is likely we will see void periods continue to fall over the coming months and yields continuing to rise as demand for rented accommodation grows."

The average void period per year is currently at its lowest level since the first quarter of 2005 at 2.7 weeks, and has been falling since the second quarter of last year.

Meanwhile, Paragon's monthly Buy to Let Index showed that yields in May reached their highest level since February 2006.

"The private rented sector is playing an important role in filling the UK's housing gap in the current market. With fewer properties being constructed as developers cut back, demand for rented property is likely to be strong for the foreseeable future," Mr Heron said.