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Tenant demand reaches a 5-year high in 2021

According to new research by Paragon Bank, as many as 40% of landlords have observed an increase in tenant demand over the last 3 months.

06 September 2021

tenant demand

As many as 40% of landlords have observed an increase in tenant demand over the last 3 months. This is according to new research by Paragon Bank, which reports that the rise has been significant for nearly 20% of the landlords in question.

The analysis shows that 39% of landlords saw a rise in tenant demand from April to June of 2021. There was also a 2% dip in the number of landlords reporting a fall in tenant demand when compared with the period January-March this year. The research questioned more than 750 landlords in total, throughout the entire United Kingdom, with the exception of Central London. There was a year-on-year rise in landlords reporting that tenant demand had increased ‘significantly’.

The greatest increase was reported in Yorkshire and The Humber. In this region, 65% of landlords reported an increase in tenant demand. This was closely followed by Wales, where 64% of landlords reported an increase, and the South West, where the number was 63%.

The director at Paragon Bank, Moray Hulme, was quoted as saying it was “great” to observe that landlords are reporting the highest level of tenant demand since 2016. He said this is indicative of the “resilience” of the private rented sector, and that it suggests that many more people are turning to it when the need for stable, high-quality housing is extremely important.

One possible explanation for this increase in demand could be that the supply of properties to buy has been relatively limited. This has resulted in more sellers moving to renting before making their next purchase. The Monthly Letting Index from Hamptons indicates that around 10% of new tenancies agreed in 2021 involved former homeowners who have recently sold their homes. This, again, is the highest level since 2016. The number of homes available to rent in July 2021 was 43% lower than at the same time in 2020, as ex-homeowners go into competition with long-term, regular tenants.

An increase in buy-to-let mortgage options

An increase in tenant demand is welcome news for landlords, who are currently benefitting from some of the lowest rates on buy-to-let mortgages we’ve ever seen. Several big lenders, like NatWest and Barclays, have slashed their buy-to-let mortgage rates while others like Pepper Money and Precise Mortgages have introduced higher LTV limits on their buy-to-let products.

We are also seeing more and more lenders offer fee-free mortgage deals – they are coming from names like Leek United Building Society, The Mortgage Works and Leeds Building Society. It’s important to note that fee-free deals sometimes come with slightly higher rates than those that involve arrangement fees. With that in mind, we urge you to seek expert advice to help you establish the most cost-effective option at your disposal.

Written By

Dave Relfe MCSI DipPFS CertSMP

Dave is the principal mortgage and protection adviser at Think Plutus. He has more than 15 years of experience in financial services and holds the Diploma in Financial Planning from PFS, Investment Advice Diploma from CISI, and the Certificate in Advanced Mortgage Advice from the Society of Mortgage Professionals. He has devised the unique Think Plutus approach that has helped many clients, from first-time buyers to buy-to-let investors and property developers, to people looking to remortgage or release equity from their property. Connect with Dave on LinkedIn.

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