The Private Rented Sector Trends survey, which the specialist lender has been running for the past 13 years, tracks landlord confidence and their views on the wider buy-to-let market.
During the third quarter 41% of landlords surveyed said tenant demand was growing or booming; however just over half (51%) said in their view demand was stable.
Just 3% of landlords described tenant demand as declining.
Looking ahead, 61% of landlords felt that the level of tenant arrears would remain stable over the next 12 months. In comparison 12% of landlords stated that in their view tenant arrears would increase and 8% expect a decrease.
Landlords were also asked what the most important factor is when they are looking for new buy-to-let mortgage finance. Interest rates remained the most important, having been top of the list for the past 12 months, followed by average loan-to-value and product fee.
John Heron, director of mortgages at Paragon, said: “Our latest survey of landlords reveals that the past quarter has been a stable and steady one, with just over a third of landlords saying they feel more optimistic about the prospects for their rental portfolios.
“At this point in the year, we can usually gauge how the wider buy-to-let market has performed and what likely lending volumes for the calendar year will be. Last year, the Council of Mortgage Lenders reported total buy-to-let lending for 2013 as £20.7bn.
“Current thinking is that gross buy-to-let lending this year will be around the £25bn mark, which represents a healthy increase over 2013 - but there has been some evidence that the rate of growth has slowed as the year has progressed.”
