Tenant demand rebounds for first time in two years

Property investors have been given a boost after tenant demand rebounded for the first time in two years during the second quarter of 2026.

The latest Landlord Trends research from consultancy Pegasus Insight shows 63% of landlords now describe tenant demand in the areas where they let as either ‘very strong’ or ‘quite strong’, up from 58% in Q1.

This marks the first quarterly increase since Q1 2024, following two years of consistent decline.

Almost three in ten (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 also fallen from 29% to 23%, while just 5% say demand is weak.

The proportion of landlords reporting strong demand had been falling steadily from 83% in the first quarter of 2024 to a low of 58% in the first three months of 2026.

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.

“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 private rented sector for their homes and that sufficient rental supply is essential to meeting that need.”

It comes amid concerns about the Renter’s Rights Act reforms and the impact on rental property supply.

Mark added: “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.”