Rental yields in May were at their highest level since the start of 2006, states to the latest Paragon Mortgages' buy-to-let index. Landlords can now expect an average yield of 6.4 percent.

In the last year rental incomes have increased by nearly 12 percent - 6 percent in the past six months.

Although house prices have been falling, there is strong tenant demand caused by difficulties for first time buyers to get on the property ladder in the current economic climate. This has pushed up rents, leading to better yields for landlords.

The private sector has also benefitted from the fact that social housing cannot fulfil demand.

Almost 75 percent of residential landlords have also intimated that despite the economic climate they would be encouraged to take on new properties due to the chances of getting a good deal on properties for sale with 14 percent of landlords claiming they are just about to make purchases.

• Estate agents Savills have joined the list of property companies who have publicly welcomed the recommendations of the recently published Carsberg into standards and regulation in the residential property business.

The Review was jointly commissioned by RICS, NAEA, and ARLA. Sir Bryan Carsberg, the former Head of the Office of Fair trading (OFT) was given the task of presenting an independent and well researched report to help encourage the Government into regulating the business sectors covered by the report and improving the whole of the house sale and lettings process.

Christopher Lacy, the Director of Savills who made recommendations to the Carsberg Review, said: “It is gratifying that such a well respected figure as Sir Bryan Carsberg, after exhaustive research and consultations, has come up with sane and sensible recommendations which the Government should now implement.

“The logic behind his recommendations that sales and lettings should be subject to proper regulation and that practitioners should have training and set standards is irrefutable.

“There can hardly be a consumer in the land that would not want proper regulation of his or her estate agent and improvements to the house buying process.”