A substantial proportion of landlords, accounting for 91%, overseeing properties in Outer London have reported a notable surge in tenant demand during the second quarter, as per recent research conducted by Paragon Bank.

This research, undertaken in collaboration with BVA BDRC and encompassing 983 landlords, has illuminated a supply-and-demand dissonance, driving an 87% increase in rent levels within local markets.

Noteworthy among the findings is the fact that 67% of landlords across the entirety of Britain have witnessed a growth in tenant demand during Q2, maintaining the high levels seen in the preceding quarter.

Regions such as Outer London, the East Midlands, and Wales have displayed robust demand, with 91%, 86%, and 82% of landlords respectively confirming an uptick in tenant demand. In contrast, the North East has seen a demand increase of 69%, albeit accompanied by a minor 6% downturn.

Coinciding with the heightened demand, a significant 87% of landlords have reported escalating rental prices within their local markets.

This trend seems poised to extend into the future, with 51% of landlords expressing their intent to raise rents across their portfolios in the coming six months.

Notably, landlords in regions including Wales (94%), the North East (92%), Yorkshire & Humber (91%), and the East Midlands (91%) exhibit the strongest inclination toward implementing rent hikes.

Louisa Sedgwick, the Commercial Director of Mortgages at Paragon Bank, emphasizes the persistent nature of tenant demand and its far-reaching effects on the rental landscape. Sedgwick notes, "Tenant demand shows no signs of slowing down in many parts of the country. With supply not growing quickly enough to keep pace, we are seeing rental inflation and that is likely to continue until we see demand more in balance with supply."

Landlords attribute the driving forces behind rent hikes to general inflation (74%) and the mounting costs associated with property maintenance (59%).