Tenant demand rebounds despite landlord investment concerns

Landlords have been given a boost as research suggests tenant demand has rebounded for the first time in two years.

The latest Landlord Trends data for the second quarter of 2026 from Pegasus Insight, shows that 63% of landlords now describe tenant demand as either ‘very strong’ or ‘quite strong’, up from 58% in the first three months of 2026.

It marks the first quarterly increase since the first three months of 2024, following two years of consistent decline.

The improvement in demand comes as the supply of homes in the Private Rented Sector (PRS) remains under pressure amid warnings of exits due to the Renters’ Rights Act reforms.

Tenant demand has been gradually normalising from the exceptional levels recorded in 2024.”

Mark Long (pictured), founder and director of Pegasus Insight, says: “Tenant demand has been gradually normalising from the exceptional levels recorded in 2024, so a five percentage point rise this quarter suggests that the need for rental accommodation remains considerable.

“It is particularly notable that the increase is being driven by landlords reporting very strong demand. Almost three in ten now fall into this category, while just 5% describe demand as weak. These figures are an important reminder that millions of households rely on the PRS for their homes and that sufficient rental supply is essential to meeting that need.”

Investment concerns

But there are concerns that demand is beginning to strengthen again at a time when landlord appetite for investment remains weak, with far more landlords still looking to sell property than buy.

Long adds: “Any further measures that discourage investment or prompt more landlords to reduce their portfolios risk widening that imbalance. If demand continues to recover while the stock of available rental homes contracts, the pressure will ultimately be felt by tenants through reduced choice and higher rents.

“At a time when housing supply is already constrained, policy needs to recognise the vital role played by private landlords in providing homes. The priority should be encouraging investment and retaining existing rental stock, and the new government should be wary of introducing further barriers that risk reducing supply.”