House price rises this year have reduced rental yields in the buy-to-let market, according to new research.

The BDRC Continental Landlords Panel survey, recently commissioned by Paragon Mortgages, indicates that the average buy-to-let rental yield fell in 2013 by 10%, brought about by rising house prices.

This saw a reduction in average year-on-year rental yield in Q3 this year from 6.7% to 6% based on gross figures.

The survey, undertaken by more than 1.000 landlords, showed that houses with multiple occupants remained the most buoyant, with migrant worker and student accommodation delivering yields of 7 and 6.6.% respectively.

Paragon’s director of mortgages. John Heron, insisted there was no cause to panic and that the buy to let market was still an attractive and stable proposition for investors.

“What we are now seeing is less variation in yields across regions which suggests that we are seeing more consistent rental demand across the country.” he said.

“Demand from landlords for buy-to-let property has remained high during 2013 and I expect this will continue as we move into 2014.”