Rental demand surged during the third quarter of 2023, according to the Rental Demand Index from Barrows and Forrester.
The quarterly review of tenant activity analysed rental demand based on the proportion of total rental market listings that have already had a let agreed.
Across England, some 39.8% of rental stock was taken up by tenants in Q3 2023, rising by 4.1% from the second quarter, when 35.7% of stock was rented.
However, last year rental demand stood at 46.0%, 6.2% higher than current levels.
West Sussex in the South East was the most in-demand region of England, where 56.5% of landlords who list properties had already reached an agreement with renters.
Bristol ranked as the second most in demand rental market at present, where 55.5% of properties have already been let.
Northamptonshire was third, with rental demand at 55%, with Bedfordshire, Hertfordshire, Somerset, Buckinghamshire, Hampshire, Essex and Cambridgeshire also among the most in demand rental markets.
Greater London registered below average rental demand, at 32.6%.
The prime region of the City of London had the weakest demand across the whole of England, at 28.6%.
Leicestershire is the fastest growing region among renters, where demand increased by 10.6% between the second and third quarters.
This growth came from a low base, however, as only 34.3% of homes were rented, lower than the national average.
In West Yorkshire, growth of 9.0% brought demand up to 35.2%, while in Tyne and Wear strong quarterly growth of 10.3% pushed demand up to 48.1%.
At the other end of the spectrum, demand dropped off the most in the Isle of Wight (-16.4%), Rutland (-12.1%) and Dorset (-11.4%).
Lancashire saw the biggest surge in interest from tenants since last year, rising by 7.4% to 39.0%, around the national average.
Leicester was also a growth area, at 6.6%, followed by Worcestershire, at 6.0%, bringing demand to 34.3% and 48.4% respectively.
Demand dropped year-on-year in the City of London (-16.8%), Nottinghamshire (-15.9%), and Greater London (-11.3%).
James Forrester, managing director of Barrows and Forrester, said: “Tenant activity is showing no signs of slowing down, which is reassuring news for the nation’s landlords who should be able to avoid lengthy void periods between tenancies as a result.
“What’s striking is demand is stronger outside of London, as properties in south coast areas like West Sussex are being rented out like hotcakes.
“Clearly a high number of tenants are still prioritising green space and having access to the coast, from which you can draw a number of conclusions.
“Tenants could be looking for more value away from major cities in commuter towns, more could be taking advantage of the post-pandemic work from home culture, while older tenants could be moving to areas more suitable for their needs, where they’re better placed to start a family.
“Regardless of the reasons, it’s encouraging that demand is rebalancing away from the capital and becoming more evenly distributed across England.”
