British landlords appear to remain confident in the potential for making profit in the lettings game, as new research conducted by Paragon Mortgages has found that the average portfolio increased in size to 14.1 properties in the second quarter of 2012.

Up from 12.9 in the first three months of this year, the rise reveals the growing popularity of the buy-to-let sector for investors looking to take advantage of high demand among prospective tenants.

John Heron, managing director of Paragon Mortgages, said: "What our research shows is that landlords are investing further in PRS property and they look set to continue to buy over the coming quarters.

"Whilst this will not solve the problems around supply it will make a valuable contribution."

Indeed, with 21 per cent of respondents reporting that they plan to add further assets to their portfolio in Q3, it seems that landlords have faith in the widely held view that demand for rental accommodation among the population is not set to suffer any significant drop in the near future.

And terraced houses look set to continue to be the most popular choice for investors, with 49 per cent expecting to purchase such holdings as they go about adding to their list of assets. Additionally, 26 per cent will be looking for maisonettes while 23 per cent plan to opt for semi-detached housing.

But despite the potential to achieve impressive yields through letting property, any business venture still carries risks - and the same applies in the private rental sector.

Cheap landlord insurance policies can protect investors from having to foot expensive repair bills in the event of any accidents that could threaten the continued profitability of their portfolio, and this is particularly important if they will be taking out further loans to purchase more assets.

Yet while such factors have to be taken into account, it still seems that the buy-to-let sector is in no imminent danger of having its bubble burst, meaning it is likely to maintain its appeal to investors.