Tenant demand softens but remains historically strong
Landlord research carried out by mortgage market specialist Pegasus Insight shows that tenant demand in the private rented sector has softened slightly over the past year, but remains high by historical standards.
The latest Landlord Trends research reveals that more than two thirds (68%) of landlords continue to describe tenant demand in their area as ‘strong’, despite this being down 11 percentage points year-on-year. Overall, 30% of landlords say demand is ‘very strong, and 38% ‘quite strong’. Just 5% of landlords report weak demand, underlining the continued resilience of tenant demand across most parts of the market.
Landlords operating in the North East reported the strongest level of demand this quarter (71%), as in Q2, while the East Midlands generated the weakest demand (60%).
The incidence of voids increased this quarter, with 44% of landlords reporting that they had experienced an empty property at some point during the previous 12 months, up 7% on the previous quarter.
The findings suggest that, after several years of intense pressure, the rental market may be moving into a more stable phase. While demand remains firm, affordability constraints and wider economic pressures appear to be tempering the pace of activity, bringing conditions closer to longer-term norms.
Mark Long, founder and managing director of Pegasus Insight, commented: “This slight easing in perceived tenant demand doesn’t indicate any fundamental weakness in the rental market. Demand remains strong by historical standards, but we are starting to see a shift away from the exceptionally tight conditions of recent years.
“Affordability is now playing a bigger role in shaping behaviour on both sides of the market. Tenants are more cautious about moving, while landlords are balancing rising costs, regulation and the realities of what renters can afford. The result is a market that still has solid underlying demand, but one that is gradually becoming more measured and sustainable.”