Tenant demand has rebounded for the first time in two years, with 63% of landlords reporting strong demand in their local rental markets in Q2, up from 58% in Q1, new figures from Pegasus Insight have revealed.

According to the firm's Landlord Trends research, the proportion describing demand as “very strong” rose 7% to 29%, while 34% reported “quite strong” demand. The share reporting average demand fell from 29% to 23%, while just 5% described demand as weak.

The latest increase represents the first quarterly rise in strong tenant demand since Q1 2024, following a prolonged decline from 83% two years ago to a low of 58% in Q1 earlier this year.

The rebound comes as the supply of homes in the private rented sector remains under pressure, with landlords continuing to be more likely to sell properties than buy them.

Mark Long, founder and director of Pegasus Insight, said: “Tenant demand has been gradually normalising from the exceptional levels recorded in 2024, so a five percentage point rise this quarter suggests that the need for rental accommodation remains considerable.

“It is particularly notable that the increase is being driven by landlords reporting very strong demand. These figures are an important reminder that millions of households rely on the PRS for their homes and that sufficient rental supply is essential to meeting that need.

“At a time when housing supply is already constrained, policy needs to recognise the vital role played by private landlords in providing homes. The priority should be encouraging investment and retaining existing rental stock, and the new government should be wary of introducing further barriers that risk reducing supply.”

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