The UK’s private rental sector is currently experiencing a significant surge in tenant demand, with an imbalance between the number of available properties and the number of prospective tenants. This data comes from a recent survey conducted by Paragon Bank, which highlights the intensifying competition in the rental market.
The survey queried nearly 800 landlords, revealing that an overwhelming 83% witnessed strong tenant interest in the first quarter of 2024. Breaking down these figures, 43% of landlords reported ‘very strong’ demand, while 40% noted it as ‘quite strong’. Contrasting sharply with these figures, only 1% of landlords experienced weak demand, emphasising the heated nature of the current market.
The Need for More Rental Investments
Despite some reports indicating a slight improvement in the number of rental properties available, Richard Rowntree, the managing director of Paragon, stressed that further investment is crucial. Rowntree explained, “This research is evidence that investment in rented homes is still very much needed as demand still outweighs supply.” He advocates for the construction of more rental homes, which he believes is the most effective strategy to offer tenants more choices and to maintain rent increases at manageable levels.
Predictions for Future Demand
Looking ahead, Rowntree predicts that tenant demand will continue to grow. This forecast is based on expected increases in population and household formation over the next decade. “Rental housing supply needs to keep pace to ensure those who want or need to rent a home have a choice of property at a reasonable price,” Rowntree added, highlighting the necessity for a sustainable balance between supply and demand in the rental market.
Regional Variations in Demand
The study also pointed out regional disparities in tenant demand. The South West and North East emerged as areas with the highest demand, where more than half of the landlords reported ‘very strong’ interest. On the other hand, Yorkshire and the Humber displayed slightly less, yet still significant, demand levels, with 49% of landlords reporting ‘quite strong’ demand and 31% ‘very strong’.