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Average rents have risen to more than £1,000 a month (£12,041 annually) over the last six months, according to Paragon Mortgages' latest Buy-to-Let Index.

The index also revealed that rents increased 4 per cent in the first quarter to 2008, indicating that the market is not suffering greatly from turbulence in the wider property market.

The increase is the result of buoyant demand for rented homes, which is placing a strain on the stock of private rented sector accommodation.

A third of landlords said that tenant demand was expanding rapidly - the highest proportion of landlords making such claims in four years. A further 58 per cent said tenant demand it is strong and stable.

Yields have remained stable at 6.3 per cent for the third consecutive month, as annual rents rose from £11,886 in February to £12,041 in March.

Paragon's director of mortgages John Heron says: "The backdrop for buy-to-let remains positive across the country - potential residential purchasers are reluctant to buy in the current market or are unable to secure a mortgage and this is fuelling extra demand for rented accommodation.

"The professional end of the market remains committed to buy-to-let over the long term. They typically hold their investments for a decade or more, they are not intending to sell following the capital gains tax (CGT) changes and they are not experiencing pressure on their finances as a result of the credit crunch, as they borrow an average of less than 40 per cent of the value of their portfolios.

"On top of that, they are enjoying steady growth in rents. The average rental property now generates in excess of £1,000 per month, and this upward trend looks set to continue in the future."