Tenant demand is slackening 35% of landlords told leading buy to let lender BM Solutions.
The research shows renters' looking for a home is at the lowest since the second quarter of 2012.
Although the figure is a national average, buy to let demand is still high in London and the East of England, while the lowest is in Yorkshire and Humberside.
However, confidence in the buy to let market is still riding high with 68% of landlords considering prospects for the private rented sector are still good.
Landlords also told researchers they felt the economy as a whole is improving.
Yields are falling as house prices rise and rents stay static, added the study.
The average gross buy to let return on investment was 6% for the third quarter of 2013.
Landlords in the North-East are enjoying returns of 6.7%, while those in Yorkshire and Humberside are also seeing the lowest yields as well as low demand for their homes. They reported a gross yield of 5.7%.
Voids ' the time a rented property stands empty ' are also increasing.
More than two thirds of landlords (36%) said they had an empty buy to let during the third quarter of 2013.
This figure is 3% up on the second quarter, although the average void had decreased to 64 days.
Phil Rickards, head of sales at BM Solutions said; “The squeeze on spending does mean that we’re seeing more landlords using their rental income to supplement the cost of living.
“However, confidence in the UK property market is leading to more people entering the market, importantly seeing it at as long term investment rather than focusing on the short term.”
The survey conducted by market research firm BDRC Continental should supply more accurate figures soon as The Nationwide?s buy to let arm, The Mortgage Works and HSBC are inputting fresh data alongside BM Solutions.
Article courtesy of LandlordZONE