Paragon Bank has given investors a valuable insight into where tenant demand is at its strongest in Britain.

The research of 983 landlords, carried out by BVA BDRC, showed 91% of landlords reported rising tenant demand in outer London during the second quarter of the year, with 67 per cent reporting demand grew ‘significantly’. 

In the East Midlands, 86 per cent of landlords reported rising tenant demand, followed by Wales at 82 per cent.

The weakest region for tenant demand was the North East, but even here 69 per cent of landlords recorded an increase in demand and only six per cent stated that demand fell during the quarter.

Overall, 67 per cent of landlords across Britain reported increasing levels of tenant demand during the second quarter, unchanged from the first quarter and an equal record high.

Only two per cent of landlords reported falling levels of demand, down from four per cent last quarter.

The survey highlighted that strong demand was leading to rent increases – 87 per cent of landlords said rental prices were increasing in their local market, with 51% stating that they planned to increase rents across their own portfolios within the next six months.

Landlords with properties in Wales (94 per cent), the North East (92), Yorkshire & Humber (91) and East Midlands (91) were most likely to see rent increases in their local market.

Paragon Bank Commercial Director of Mortgages Louisa Sedgwick says: “Tenant demand shows no signs of slowing down in many parts of the country. With supply not growing quickly enough to keep pace, we are seeing rental inflation and that is likely to continue until we see demand more in balance with supply.”

General inflation was cited as the main driver for increasing rents – 74 per cent of landlords looking to increase rents in the next six months said the rising costs of running a property was the primary cause, followed by alignment with local market rents (59 per cent).