"The fact that demand has eased for the first time in a while suggests we may be at a turning point. For landlords, this could mean less scope for rent increases in some areas, especially where affordability is already stretched"
- Bethan Cooke - Pegasus Insight
Tenant demand in most parts of the UK is still strong, although it has eased over the past year, according to new research from mortgage market specialist Pegasus Insight. Its Q2 2025 Landlord Trends report found that 71% of landlords rate tenant demand in their area as ‘strong’. Within this, 33% described it as ‘very strong’ and 39% as ‘quite strong’. The figure is down from 82% in Q2 2024.
Only 4% of landlords reported ‘weak’ demand, while 18% described it as ‘average’.
This cooling follows a period of exceptionally high demand driven by low rental supply, post-pandemic migration, and sustained pressure on affordable housing. While levels remain elevated by historic standards, the shift could influence rental growth, yields, and investment appetite in certain markets.
Regional differences
Yorkshire & Humber recorded the highest proportion of landlords reporting ‘strong’ demand at 81%, with 36% describing it as ‘very strong’. London and the East Midlands saw lower figures at 64% and 63% respectively.
Factors behind the change include a growing proportion of students choosing to live at home, now around one-third nationally. This share is higher in London and parts of the Midlands, reducing demand in local markets.
Affordability pressures are also prompting more tenants to stay put, share accommodation, or live with family, particularly where rents are highest. In addition, the expansion of remote and hybrid working has allowed more renters to live further from traditional commuter hubs.
Market outlook
"Even after an 11% drop, over seven in ten landlords are still seeing strong tenant demand, which shows just how competitive the rental market remains," said Bethan Cooke, director of Pegasus Insight (pictured). "However, the fact that demand has eased for the first time in a while suggests we may be at a turning point. For landlords, this could mean less scope for rent increases in some areas, especially where affordability is already stretched.
"That said, demand levels remain far above those of five years ago, and the fundamentals of the Private Rented Sector are still solid. The question is whether this is the start of a sustained rebalancing between supply and demand, or just a short-term pause in the face of wider economic pressures. Either way, landlords and lenders will be watching closely."
