Currently the economic stance in the UK implies that the housing market will struggle over the coming months.

While 'high' interest rates could give landlords decent returns, an ominous economic outlook might equally be good news for buy-to-let investors. Fewer buyers may buy their own place until the future of property prices becomes much clearer - therefore the demand for more rental property will be higher.

The latest figures from Paragon, the major Buy-to-let lender which was a victim of this crisis only recently, show that rents rose by 19 per cent in 2007, with an 8% increase during the final quarter of the year.

According to Paragon, yields for landlords increased during the end of 2007, reaching 6.2%.

Housing market fall benefits landlords
John Heron, managing director of Paragon Mortgages, states: "There's been a fall in consumer confidence in recent months, but this appears to be to the benefit of established landlords.

"In fact, 2007 proved a strong year for landlords, who generated very healthy investment returns averaging over 21 per cent."

Heron continued: "That provides solid evidence from the sharp end that landlords remain confident about the long-term prospects of residential property investment, as the UK population continues to grow on the back of inward migration and other demographic factors.

"Buy-to-let has certain counter-cyclical characteristics which mean it will remain resilient and indeed will outperform the market at times of lower economic confidence and growth."

However, data released by Royal Institution of Chartered Surveyors in the closing months of 2007 suggests (by this, do not read the Sq Ft agrees!) that only rich landlords will be able to capitalise on the increasing demand for rented property.

When the report was formed in November, would-be-investors needed to put down a deposit of £65,600 in order to get a footing on the Buy-to-let ladder.  The Royal Institution of Chartered Surveyors compared this to a figure of £10,100 in 2002.

David Stubbs, a senior economist with The Royal Institution of Chartered Surveyors, explains the problem: "It takes more capital than ever to set up a Buy-to-let investment. Would-be investors who have missed out on the impressive returns of previous years are now finding the hurdles to property investment are higher than they imagined.

"However, existing landlords should be able to use the equity in their past investment properties to fund the deposit needed for new ones and this should ensure that demand from the Buy-to-let sector does not dry up entirely."