Rental market booming as tenants push demand to ‘all time high’

The number of landlords reporting increasing demand from tenants is at an all-time high, according to research from Paragon Bank.

The survey of more than 600 landlords by BVA BDRC revealed – excluding those who were unsure – that 69% have seen increasing levels of demand, with 36% for whom the increase was significant.

Regionally, net increases of 79% and 74% were reported by landlords in the South West and South East (excluding London) respectively.

Although still seeing relatively strong levels of interest from tenants, 59% of investors with property in the North East had seen increased demand.

This figure falls to 54% among those managing portfolios in central London, partly due to the region seeing the highest levels of falling demand (16%).

Significant shift

Paragon’s findings suggest that a significant shift is being seen in the appetite for central London living as tenants continue to return to the capital; the same period in 2020 saw a net increase in tenant demand reported by just 16% of central London landlords, while 58% reported that it was decreasing.

Richard Rowntree (pictured), Paragon Bank MD, says landlords have been recording rising levels of tenant demand following the first lockdown, which reflects the shift in housing need created by the virus.

“The third quarter of the year is usually a busy one for the private rented sector with graduates starting new jobs, the beginning of the academic year and people turning to housing once the holiday season is over,” says Rowntree.

“With this seasonal demand added to already high levels of tenant demand, we are beginning to see a shortage of property in certain parts of the PRS, which is leading to rental inflation. The sector needs to expand to meet these exceptional levels of tenant needs.”