Buy-to-let rental yields stabilised in June, remaining steady at 6.4 per cent for the second consecutive month.

According to Paragon Mortgages' latest Buy-to-Let Index, average UK rents, which had been rising rapidly, have stabilised just short of £1,000 a month.

However, the average still remains 9.3 per cent higher than a year ago.

Wales, the North and the North West achieved the highest yields, reporting 7.6 per cent, 7.4 per cent and 7.3 per cent respectively.

Paragon said strong tenant demand was encouraging landlords to retain property, whilst also looking for opportunistic purchases.

It added that the average portfolio gearing was less than 40 per cent, leaving landlords with the ability to free up equity for further investment.

John Heron, managing director of Paragon Mortgages, said: "For the vast majority of landlords, a slow housing market is nothing new. They recognise the counter-cyclical nature of buy-to-let and many landlords have held property through previous housing cycles.

"Falling prices are spooking first-time buyers and they are delaying house purchase, with tenant demand at high levels as a result."