Six in 10 landlords recorded increased tenant demand for their properties in the final quarter of 2023, Paragon Bank research has revealed.
Research carried out on behalf of Paragon Bank showed that almost two-fifths (37%) of landlords reported demand from tenants increased significantly during the three months to the end of December, with a further 26% experiencing slight increases.
According to the findings, 16% reported no change in demand, while just 4% felt it had decreased.
On a regional level, demand was strongest in the North West, with three-quarters (75%) reporting increases in tenant demand for the period.
This was closely followed by Yorkshire and The Humber, where a similar proportion (74%) identified increased tenant demand, and the East Midlands where it was reported by just over seven in 10 (71%) landlords.
The survey, undertaken by BVA BDRC, also highlighted a link between increased tenant demand and rental inflation.
Rent increases were more likely to be reported by landlords in the most in-demand regions compared with the rest of the country, with the exception of the East of England.
In each of these areas, just under nine in 10 landlords said that rents are rising currently – 89% in the East Midlands, 88% in the North West and 87% in Yorkshire and The Humber – which compared with around eight in 10 in regions such as the South West (81%) and Outer London (79%).
Looking forward, 51% of landlords were planning to increase rents across their own portfolio in the next six months, with the increased cost of running a property the key driver for those seeking to up rents (70%).
Other forces behind planned rent increases include alignment with broader market rents (62%) and increased mortgage costs (40%), although this fell by eight percentage points compared to Q3.
Richard Rowntree, managing director of mortgages at Paragon Bank, said: “Although tenant demand has come off its record highs, there remains a chronic supply demand imbalance across large parts of the country.
“Although it’s a complex issue with many factors at play, the supply and demand dynamic dictates that we pay more for goods and services that are in high demand and short supply.
“It is unsurprising then to see that the landlords in the regions seeing the most demand are amongst the most likely to see rents rising.
“This illustrates how a healthy, sufficiently supplied private rental sector (PRS) is needed to maintain rent levels that are affordable for the millions of people that live in rented homes.”
