Despite confidence falling in buy-to-let in the past three months, more that 40 per cent of landlords still believe that now is a good time to invest.

Figures released by the owner of a UK lettings agent network found that landlords were sill in favour of investing in spite of a recent increase in capital gains tax, which could see them spending extra.

One third of the landlords questioned said they planned to expand their portfolios over the next year. Thirty seven per cent of landlords have seen an increase in tenant demand with one in 10 landlords witnessing substantial growth. Nearly two thirds of landlords (63 per cent) expect this increase to continue through to 2012.

The research also revealed that the number of landlords considering leaving the sector is also beginning to increase. However, those considering buying property in Birmingham to rent out needn't worry. In the last three months, the figure has risen from 6 per cent to 19 per cent but, this figure includes investors leaving the market through retirement or lifestyle reasons.

David Newnes, managing director of the survey company, told the Express and Star: "Rising rents and house prices offered landlords bumper annual returns at the start of the year and this was reflected in the surge in confidence. This has fallen slightly following the slowdown in house prices and the capital gains tax hike."

"But the vast majority of landlords remain committed to buy -to let. Attractive rents - just £12 per month shy of their peak and increasing yield underpin confidence in property investment."