A FAVOURABLE market for landlords, with rising rents, yields, increasing numbers of tenants and gradually rising house prices, has contributed to a healthy start to 2006 in the buy-to-let sector.

This is according to a report issued by UCB Home Loans, the specialist lender of Swindon-based Nationwide.

Council of Mortgage Lenders (CML) figures show that the number of new buy-to-let mortgages increased consistently over the six years to mid-2004, following which there was a sudden drop of 18 per cent in the last six months of the year, and another fall of four per cent in the first half of 2005.

"The situation has now dramatically turned about after a year when it looked as though interest in the market had peaked, we are now in the middle of a year of rapid expansion," said UBC Home Loans managing director, Keith Astill.

"Mid-2004 to mid-2005 was the first year in which buy-to-let purchases ever decreased, but there was a sudden leap of 40 per cent in the number of new buy-to-let mortgages in the second half of last year."

This momentum has carried over into 2006, with rising rents and increasing numbers of tenants making the market attractive to landlords, said Mr Astill.

While returns can vary significantly, a rental yield of five per cent is a reasonable expectation, according to UCB Home Loans.