A recent study conducted by Paragon Bank has revealed a surge in tenant demand, with six out of 10 landlords experiencing increased interest in their properties during the final quarter of 2023.
Commissioned by Paragon Bank, the research indicated that 37% of landlords reported a substantial rise in tenant demand from October to December, while an additional 26% noted slight increases. Only 16% observed no change in demand, with a mere 4% reporting a decrease.
Regionally, the North West emerged as the hotspot, with an impressive 75% of landlords noting heightened tenant demand. Yorkshire and The Humber closely followed, with 74%, and the East Midlands registered a significant 71% of landlords reporting increased interest.
The study, conducted by BVA BDRC, established a correlation between rising tenant demand and rental inflation. Landlords in high-demand regions were more likely to report rent increases compared to other parts of the country, excluding the East of England.
In areas such as the East Midlands, North West, and Yorkshire and The Humber, nearly 9 in 10 landlords indicated ongoing rent hikes – 89%, 88%, and 87%, respectively. In contrast, regions like the South West (81%) and Outer London (79%) reported slightly lower percentages.
Looking ahead, the survey found that 51% of landlords were planning to increase rents within the next six months. The primary motivator for this upward trend was the increased cost of property maintenance, cited by 70% of respondents. Other factors contributing to planned rent increases included aligning with broader market rents (62%) and increased mortgage costs (40%).
Richard Rowntree, Managing Director of Mortgages at Paragon Bank, commented on the findings, stating, “Although tenant demand has come off its record highs, there remains a chronic supply-demand imbalance across large parts of the country. The regions experiencing the most demand are also the most likely to see rents rising, emphasizing the need for a healthy, sufficiently supplied private rental sector to maintain affordable rent levels for millions of people living in rented homes.”