A recent investigation conducted by Paragon Bank has unveiled that the tenant demand communicated by landlords has skyrocketed to an all-time high. The research collected responses from almost 700 landlords, and it discovered that 67% of them saw increased tenant demand in the first quarter of the year. The previous record high was recorded during the final quarter of 2022, with a total of 65%.

In the survey, landlords were asked to assess the tenant demand over the last three months, and a whopping 44% of respondents noted a significant increase. This percentage is up from 39% during the final quarter of last year and is also the highest proportion since research agency BVA BDRC began tracking the metric in 2011. On the other hand, 23% of landlords indicated that the tenant demand had increased slightly, 15% saw no change, while only 4% experienced a decrease.

Due to this rising demand, there has also been an increase in rents. According to the survey, 85% of landlords revealed that rents were currently rising in the areas where they let property. Moreover, over half (52%) of landlords plan to increase rents across their own portfolio in the next six months, with the average planned increase being 8.2%.

Of those looking to increase rents, 73% said they were covering the increased cost of running a property, while 60% were aligning with local market rates. Increased mortgage finance costs were also cited by 49% of those planning to raise rents.

Despite landlords reporting increased tenant demand across England and Wales during the first quarter of this year, there were regional variations in the results. The highest levels were observed by those operating in the East of England, with nine in ten of them reporting an increase, whereas the lowest was noted by the 73% of West Midlands-based landlords.

As far as the current levels of tenant demand are concerned, 94% of landlords in the South West reported that they were experiencing strong or very strong demand for their properties. In addition, over 90% of landlords in Wales (92%), West Midlands (92%), and the South East (91%) confirmed that demand was currently at positive levels.

Richard Rowntree, managing director for mortgages for Paragon Bank, said that "the fact that we've seen another high in the proportion of landlords who have told us that they've experienced an increase in tenant demand reinforces what I've said previously; put simply, we need more private rented sector homes, not less. An important element of this is policy that strikes the right balance between driving up standards and providing tenants with protection while not acting as a barrier to investment."

He concluded by warning that "failure to address this will further drive rental inflation and increase competition for rented homes at a time when affordable housing is as important as ever."