The buy-to-let property sector remains strong as demand for rented housing continues to rise, a new survey claims.

Research by Paragon Mortgages found that rental incomes rose by 2.39% in the month to June, contributing to a rise this quarter of £351 or 3.48%.

In its July buy-to-let index, Paragon predicts that landlords are set for further gains owing to remodelled population demographics and continuing migration from recently-acceded EU states.

"Housing demand is growing, with more single person households, higher numbers of students as well as the effect of immigration," said managing director John Heron.

"The Department for Communities and Local Government forecasts 209,000 households need to be formed per annum, with immigrants accounting for perhaps a third of new households.

"Such newly formed households are most likely to live in rented accommodation [and] in response to this growth in demand for rented properties, landlords are actively building their portfolios in all parts of the country," Mr Heron said.

Other highlights:

• Eight out of ten regions saw a rise in rents, led by East Anglia, Greater London and Wales.
• Yields picked up slightly between May and June, up from 6.03% to 6.04%. Yields continue to be highest in the South West (6.48%), followed by Wales (6.47%) and the North West (6.45%).
• This month, Greater London heads the table in terms of overall returns. The total return on a typical property in Greater London bought 12 months ago was 37.69%, ahead of East Anglia at 37.61%.
• Property values rose by 2.27% between May and June, from £168,935 to £172,772.