By Robert Adungo

Mortgage availability is expected to continue being an issue in 2012, with many aspiring buyers likely to still find it difficult to get onto the property ladder due to the large size of deposit required.

While this is bad news for those looking to buy and even for those looking to sell in some cases, it is a welcome prediction for many existing landlords and buy-to-let mortgage holders because it means there is bound to be demand for their properties.

Indeed, many in the sector expect tenant demand to maintain its high level in 2012, according to recent research by specialist buy-to-let lender Paragon Group. More than half (56%) of landlords polled expect tenant demand to "either grow or boom" in 2012, with just 6% thinking it will decline.

Nearly half (45%) of respondents also expect rental income to increase over the next 12 months, with 53% believing it would remain stable and only 2% thinking it would instead decrease.

Positive future for private rented sector

With the private rented sector (PRS) expected to play a vital role in tackling the UK housing shortage crisis, according to the National Landlords Association (NLA), perhaps this may be the time to consider investing in the sector.

Speaking last year at the NLA's annual national conference in Manchester, Terrie Alafat, director of housing growth and affordable housing at Communities and Local Government said it is "an exciting time for the private rented sector".

"Housing is definitely at the top of the government's agenda and the private rented sector is in the middle of all of that. We know that demand is continuing to grow and the sector has responded to that, expanding to house about 3.4 million households in England, which is an increase of one million since 2005," he added.

Bullish landlords & reluctant landlords

Indeed, those toying with the idea of getting into buy-to-let will be glad to hear that some landlords are so confident about the future potential of the sector that they are planning to expand their portfolios in the PRS over the coming months.

However, budding investors must prepare to compete with a different kind of landlord - the reluctant one. Unable to sell their homes due to the state of the housing market, many people are choosing to put their properties up for rent rather than selling in a depressed environment and making a loss.

According to recent research from the Association of Residential Lettings Agents (ARLA), nearly half (47%) of its member agents reported an increase in the number of "unplanned" lettings during the last three months of 2011 compared to 40% at the beginning of the year. But this should not dissuade those looking to join the sector on a professional basis.

Buy-to-let mortgage choice

Lender Paragon Mortgages' managing director John Heron notes that "this is an interesting time for the PRS as landlords are experiencing very high levels of tenant demand as other areas of the housing market come under increasing strain".

And mortgage availability need not be an impediment either. Paragon kicked off 2012 with the launch of 50 new buy-to-let mortgages designed especially to cater for the professional landlord.

In a bid to make it easier for borrowers to obtain lending, the firm also reviewed existing lending criteria, thereby making it more flexible for intermediaries to source the best possible products for their clients. Six of the new mortgages - which are available from the firm's Mortgage Trust brand - are specifically aimed at the smaller-scale landlord.

Late last year, lender Leeds Building Society also announced that its fixed-rate buy-to-let range will now offer fees-assisted deals for periods including two (4.29% at 60% loan-to-value), three (4.49% at 60% LTV) and five years (5.49% at 70% LTV). It also offers a two-year discount rate at an initial rate of 3.79%, followed by the lender's 5.99% standard rate. It's valid on a 70% LTV mortgage and it has a fee of £999.

Many others are offering competitive deals - rival lender Principality Building Society has a buy-to-let tracker deal that comes with an initial rate of 2.84% until December 2013, followed by a standard rate of 4.99%. Available up to 60% LTV, the mortgage has a 2.5% fee in place.

And Northern Rock is also offering 3.29% on its tracker deal, which lasts until March 2014. There's a 4.79% standard rate that will kick in following the expiry of the initial period on the loan, which is available to those who can raise 40% of the value of the property being bought. It has a 2.5% fee in place.

Exercise caution

Even though the signs are positive, those looking to get into buy-to-let should not take their decisions lightly. Like any investment, property could lose you money especially if rental income will be the principle means of servicing the mortgage.

As well as a purchased property losing value, there may be periods when there are no tenants in residence, meaning there should always be extra money to cater for such times. It is vital to understand an area before investing in buy-to-let as there's no point pouring money into a place with minimal chances of returns.

One of the areas likely not to disappoint as far as returns are concerned is student accommodation, but again, proper research needs to be carried out before investing. If there's an abundance of student accommodation in a certain area, perhaps it may be moneywise to move elsewhere.

A knowledgeable expert, such as a local estate agent, should be able to provide proper guidance. To cover all bases, seek the opinion of more than one estate agent.

It's also a very good idea to talk to a mortgage broker before you step out into the buy-to-let market. You can talk to one of our regulated mortgage brokers right here at mortgages.co.uk who will be able to talk you through your options.