First quarterly increase since Q1 2024
Tenant demand has seen its first quarterly increase after two years of consistent decline, with Q2 2026 Landlord Trends research from Pegasus Insight showing that 63% of landlords now describe tenant demand in the areas where they let as either ‘very strong’ or ‘quite strong’.
The figure is up from 58% in Q1 and is the first quarterly increase since Q1 2024.
‘Very strong’ demand was reported by almost three in ten (29%) of landlords, up seven percentage points from Q1. Meanwhile, 34% reported ‘quite strong’ demand. Those reporting ‘average’ demand fell from 29% to 23%. Only 5% of landlords reported weak demand.
Previously, the proportion of landlords reporting strong demand had fallen consistently since 2024, down from 83% in Q1 2024 to 82% in Q2, 79% in Q3 and 77% in Q4. Further drops were seen during 2025, reaching 61% by Q4 and a low of 58% in Q1 2026, before recovering to 63% in the latest quarter.
However, despite the improvement in demand, supply remains a challenge for the Private Rented Sector. Pegasus Insight’s Landlord Trends research consistently shows that landlords are considerably more likely to sell rental properties than purchase them.
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 PRS for their homes and that sufficient rental supply is essential to meeting that need.
Intervention required
Long said that the government had to intervene to improve supply. “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,” he said.
“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.”
