Demand for rented homes has hit an all-time high, according to Paragon Bank.
A survey of nearly 700 landlords found that 67% saw higher tenant demand during the first three months of the year, a new all-time high, up from 65% recorded during the final quarter of last year, the previous high.
Significant increases were noted by 44% of landlords, up from 39% in the final quarter of last year. This is the highest figure since research firm BVA BDRC began tracking this metric in 2011.
A further 23% of landlords said that tenant demand had increased slightly, 15% had seen no change, while just 4% experienced a fall in demand.
In the face of this demand, rents have also increased.
The study says 85% of landlords said rents are rising in the areas where they let property, with 52% planning to increase rents across their own portfolios over the next six months. Of those looking to lift rents, the average planned increase was 8.2%.
Buy-to-let owners say covering the increased cost of running a property was the most common reason given for raising rents, cited by 73%, along with aligning with local market rates, 60%.
Increased mortgage finance costs were cited by 49% of those planning to raise rents.
Across England and Wales, the highest demand for rented homes was experienced by landlords in the East of England, with nine in 10 recording a rise, while the lowest was seen by 73% of West Midlands-based landlords.
In the South West, 94% of landlords said they were experiencing “strong, or very strong” demand for their properties.
In Wales, the measure was 92%, in the West Midlands it was 92% and in the South East 91% said demand was high.
Paragon Bank managing director for mortgages Richard Rowntree says: “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.
“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.”
BVA BDRC surveyed 683 landlords during March and April 2023 on behalf of Paragon Bank.
