"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."
- Mark Long - Pegasus Insight
The latest Landlord Trends research from Pegasus Insight has found that 63% of landlords now describe tenant demand in the areas where they let as either ‘very strong’ or ‘quite strong’ in Q2 2026, up from 58% in Q1. This also marks the first quarterly increase since Q1 2024.
In addition, 29% now describe tenant demand as ‘very strong’, up seven percentage points from Q1, while 34% report ‘quite strong’ demand. The proportion describing demand as ‘average’ has fallen from 29% to 23%, while just 5% say demand is weak.
This increase comes after two years of consistent decline in tenant demand. The proportion of landlords reporting strong demand had fallen steadily from 83% in Q1 2024 to 82% in Q2, 79% in Q3 and 77% in Q4. It then declined further through 2025, reaching 61% by Q4 and a low of 58% in Q1 2026, before recovering to 63% in the latest quarter.
However, the research has also consistently shown landlords to be considerably more likely to sell rental properties than purchase them, raising concerns about the availability of homes if tenant demand continues to strengthen.
"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," Mark Long, founder and director of Pegasus Insight, said.
"It is particularly notable that the increase is being driven by landlords reporting very strong demand. Almost three in ten now fall into this category, while just 5% describe demand as weak. 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.
"The concern is that demand is beginning to strengthen again at a time when landlord appetite for investment remains weak, with far more landlords still looking to sell property than buy. Any further measures that discourage investment or prompt more landlords to reduce their portfolios risk widening that imbalance.
"If demand continues to recover while the stock of available rental homes contracts, the pressure will ultimately be felt by tenants through reduced choice and higher rents.
"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."
