• 67% of landlords report increased tenant demand during Q1 2023 – a record high
• Landlords in East of England report highest levels of tenant demand
• Rents are rising as a result – 85% of landlords report increasing rents

Tenant demand reported by landlords has reached an all-time, research conducted on behalf of Paragon Bank has found.

A survey of nearly 700 landlords found that 67% experienced increased tenant demand during the first quarter of the year, a new all-time high and up from 65% recorded during the final quarter of 2022, the previous record high.

As part of the survey, landlords were asked to gauge tenant demand during the previous three months. Significant increases were noted by 44% of respondents. This is up from 39% on the final quarter of last year and is also the highest proportion since research agency BVA BDRC began tracking the metric in 2011. A further 23% of landlords indicated that tenant demand had increased slightly, 15% had seen no change, while just 4% experienced a decrease. 

In response to rising demand, rents have also increased – 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 increase 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 was cited by 49% of those planning to raise rents.  

Although increasing tenant demand has been reported by landlords throughout England and Wales during the first quarter, there was some regional variation. The highest levels were experienced by those operating in the East of England, with nine in 10 recording an increase, while the lowest was seen by the 73% of West Midlands-based landlords.

When asked about current levels of tenant demand, 94% of landlords in the South West said they were experiencing strong or very strong demand for their properties. Over 90% of landlords in Wales (92%), West Midlands (92%) and the South East (91%) said demand was currently at positive levels.

Richard Rowntree, Managing Director for Mortgages for Paragon Bank said: “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.”    

For media enquiries contact:

Jordan Lott
Media Relations Manager
Paragon Bank
[email protected]

Notes to editors:

BVA BDRC surveyed 683 landlords during March and April 2023 on behalf of Paragon Bank.
 

Paragon lends to private individuals and limited companies and has mortgages suitable for single, self-contained properties, as well as HMOs and multi-unit blocks. Paragon can accommodate higher aggregate lending limits and more complex letting arrangements including local authority leases and corporate leases along with standard ASTs.

Paragon introduced its first product aimed at the professional property investor in 1995 and is a member of UK Finance, the Intermediary Mortgage Lenders Association (IMLA), National Landlords Association (NLA) and the Association of Residential Letting Agents (ARLA). 

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £13 billion of assets under management and manages over 450,000 customer accounts.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ.