Two thirds of landlords (67%) across the UK have reported increasing levels of tenant demand during Q2, a figure unchanged from Q1 this year and an equal record high, new research published by Paragon Bank has indicated.

According to the findings, just 2% of landlords reported falling levels of demand, down from 4% on Q1.

Landlords with property in Outer London and the East Midlands are reporting the strongest levels of tenant demand in the UK.

A study of 983 landlords, carried out in July by BVA BDRC, revealed that 91% reported rising tenant demand in outer London during the second quarter of the year, with 67% stating that demand had grown “significantly”. In the East Midlands, 86% of landlords reported rising tenant demand, followed by Wales at 82%.

The weakest region for tenant demand was the North East, where 69% of landlords recorded an increase in demand, and 6% stated that demand fell during the quarter.

Paragon’s findings also highlighted that strong demand was leading to rent increases, with 87% of landlords stating that rental prices were increasing in their local market, and 51% indicating that they planned to increase rents across their own portfolios within the next six months.

Landlords with properties in Wales (94%), the North East (92%), Yorkshire & Humber (91%) and East Midlands (91%) were most likely to see rent increases in their local market.

Commercial director of mortgages at Paragon, Louisa Sedgwick, said: “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.”

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