THIS YEAR'S buy-to-let market is set to become even stronger than 2005, which itself was a successful year, says a report from Paragon Mortgages.

An improvement in landlord confidence as the year progressed compensated for difficulties early in 2005, when increased interest rates and concerns over affordability knocked confidence throughout the market.

Managing director of Paragon Mortgages, John Heron, has predicted the trend will continue this year and landlords can expect a profitable year.

He said: "We're clearly now in a more buoyant phase for landlords. The market has proved more resilient than many expected and we are definitely seeing a buy-to-let bounce.

"This is, to a significant extent, the result of lower financing costs following interest rate reductions earlier in the year.

"This has enabled investors to borrow at very competitive prices, either on a fixed or variable rate basis, feeding through into the recent resurgence of activity."

Landlords with Paragon are now holding an average of 11.8 properties in their portfolios and Paragon's buy-to-let figures predict landlords expect their portfolios to grow by five per cent during this year.

Mr Heron added: "Investors expect to grow the size of their portfolios to an average of 12.2 properties."