Buy-to-let landlords have seen rents, yields and prices all rise in January, according to mortgage lender Paragon.

Paragon said landlord rental incomes rose by 1.6% over the month, from £10,297 in December 2004 to £10,459 in January 2005.

Rental incomes were 16.4% higher than the £8,989 recorded in January 2004 and this increase in rents translates into an increase in landlord yields, which at 6.76% are now at their highest level for 6 months.

The lender also said average property values are now £154,672 compared with £152,834 in December, an increase of 1.2%.

John Heron, managing director of Paragon Mortgages, said: “Landlords have seen a positive start to this year, after a year in which they earned very good average returns on their residential investment portfolios. At the start of 2005, rental incomes are rising, helped by robust levels of tenant demand. This is in part attributable to a slower owner-occupier market and the ongoing impact of affordability constraints on first time buyers. This is now clearly feeding through into higher yields, which have followed a generally upward trend since last September.”