Paragon Group’s latest Private Rented Sector (PRS) Trends report has revealed a continued strengthening of tenant demand over the third quarter of the 2010. It found that 36% of landlords saw rising levels of tenant demand during the period, compared to 6% who said it was falling.

This is an improvement on the previous quarter, when 29% reported growing tenant demand and 8% said it was falling. The proportion of landlords reporting growing levels of tenant demand has risen consistently since the second quarter of 2008, coinciding with constrained mortgage supply in the owner-occupier market.

42% of landlords believe that tenant demand will be stronger in 12 months’ time, which is a considerable increase on the previous quarter (35%), although a higher proportion (10%) also forecast falling tenant demand over the next year compared to the previous quarter (8%).

Nigel Terrington, Paragon Group chief executive, said: “Demand for private rented property is buoyant and many landlords have tenants competing for their properties. The third quarter of the year is historically a strong period for rented property with the beginning of the new academic year and recent graduates starting in employment