The Q2 2023 Private Rented Sector (PRS) Trends report reveals that the record high levels of tenant demand detailed in previous editions have remained, with this quarter again seeing 67% of landlords reporting increases.

Although landlord confidence has understandably been dented by the challenging economic environment, it appears that this continued demand is helping to stabilise yields and keep arrears steady.

Our latest PRS Trends report, created using insight from almost 1,000 landlords, found that:

• 91% of landlords with property in Outer London reported rising tenant demand in Q2

• Tenant demand is also strong in East Midlands and Wales – 87% and 82% of landlords reported increases in tenant demand respectively

• The supply/demand imbalance is leading to rent increases – 87% of landlords report rising rent levels in their local market

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The quarterly report also explores other aspects of the private lettings industry, such as landlord investment behaviour. This highlights how the record proportion of landlords who intend to buy in the next year plan to do so within Limited Company structures, suggesting that portfolio landlords remain active in the market.

In addition, we see that investment in privately rented homes has crept up in the time since the Winter edition of PRS Trends, while divestment has reduced.

Richard Rowntree, Managing Director for Mortgages, says: “Our research shows us that the record high levels of tenant demand we’ve spoken about previously is still a key characteristic of the market.

“Although landlord confidence has understandably been dented by the economic volatility of the past year, it’s reassuring to know that they remain committed to their lettings businesses and I feel that this continued need for good, quality, privately rented homes plays a part in that.

“We know that this demand is not met by supply however, and, along with general inflationary pressures, this is the primary driver of rent increases.

“To remedy this, further investment in the sector is needed so it is important that landlords feel confident in the future of their lettings businesses. ”

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