Two thirds of landlords (67%) experienced increased tenant demand during the first quarter 2023, new analysis from Paragon Bank has indicated.

The figure is a new record high and marks a rise from 65% recorded in the final quarter of last year, the previous record.

As part of Paragon’s research, which was carried out on its behalf by research agency BVA BDRC and based on a study among 683 landlords, respondents were asked to gauge tenant demand during the previous three months, with 44% noting significant increases. This is up from 39% on Q4 2022 and is also the highest proportion since BVA BDRC began tracking the metric in 2011.

A further 23% of landlords indicated that tenant demand had increased slightly, while 15% had seen no change, and just 4% experienced a decrease.

In response to rising demand, rents have also increased. The study found that 85% of landlords said rents were currently rising in the areas where they let property, with over half (52%) planning to increase rents across their own portfolio in the next six months. Of those looking to raise rents, the average planned increase was 8.2%.

Covering the increased cost of running a property was the most common reason given by those planning to increase rents (73%), along with aligning with local market rates (60%). Increased mortgage finance costs were cited by 49% of those planning to raise rents.

“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,” managing director for mortgages for Paragon Bank, Richard Rowntree, said. “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.”

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