Tenant demand and rents up - supply stays stubbornly low

Over seven in 10 landlords report rising tenant demand during the third quarter – a new record high, research conducted on behalf of Paragon Bank has found.

In total, 71 per per cent of landlords reported increasing levels of tenant demand, up from the previous record high of 67 per cent recorded in the second quarter. 

This marks a new all-time high across the 12-year period that research agency BVA BDRC has tracked the metric. 

Just three per cent of landlords reported that tenant demand had fallen.

Regionally, the strongest levels of tenant demand can be seen in the West Midlands, with 76 per cent of landlords in the region reporting an increase, closely followed by Wales, the South East and East Midlands.

The North East and the East of England (65 and 61 per cent respectively) experienced the lowest proportion of landlords with tenant demand increases. 

Linked to increased tenant demand are rising rents, with 87 per cent of landlords identifying this as a current trend in areas where they let properties, unchanged from last quarter. 

Seven in 10 landlords stated that they have increased rents across their own portfolio within the last 12 months, up from 65 per cent in Q2. 

A lower proportion, 54 per cent, are planning to raise rents across their portfolios in the next six months, up by three percentage points since last quarter. Those planning to increase rents anticipate doing so by an average of 8.4 per cent.

Richard Rowntree, Managing Director for Mortgages at Paragon Bank, says: “The imbalance between the supply of rented homes and demand from renters is not improving. This reduces choice and increases competition for renters, while fuelling rental inflation, a scenario that often impacts the most vulnerable to the greatest degree.

“With social housing unable to meet this demand and home ownership aspirations hindered by cost-of-living pressures, further investment in the PRS cannot be delayed.”