LANDLORDS are looking forward to the coming 12 months with confidence, according to a survey.

Excellent levels of tenant demand, strong pricing power, stable interest rates and improving buy-to-let mortgage conditions are combining to create a brighter picture for the sector, says a poll by specialist lender The Paragon Group.

The survey showed that 71% of landlords were optimistic about 2011 prospects for their portfolios during the forthcoming year due to a range of factors.

More than half of landlords said they were optimistic about tenant demand during the year, with 48% stating that stable interest rates will be a key positive in 2011.

Meanwhile, the ability to increase rents was cited as a major reason to be optimistic by 30% of landlords, while landlords were also pleased with the wider availability of buy-to-let mortgage finance (16%) and easier mortgage lenders’ criteria (13%).

Regulation tops private rented sector landlords’ list of concerns for the second year in a row. Nearly half of landlords said they were worried about complying with the level of regulation required in relation to running their property business during the year.

Other concerns included tenant unemployment, falling tenant demand and the introduction of new Housing Benefit caps.

Financially sophisticated landlords plan to make a range of investments during 2011. Along with residential property (25%), landlords plan to invest in equities (32%), bonds/gilts (12%), commodities (11%), precious metals (9%) and commercial property (7.1%), as well as holding cash savings (14%).

On average, landlords believe the Bank of England’s Base Rate will end the year at 1%, up from the current rate of 0.5%.

Nigel Terrington, Paragon Group chief executive, said: “It is clear that confidence is high among landlords in the private rented sector.”

“They are benefiting from excellent levels of tenant demand, low finance costs and a strong pricing position. The availability of buy-to-let mortgage finance is also easing, albeit somewhat slowly.”