Tenant demand increased in the second quarter of 2026, reversing two years of decline, according to research from Pegasus Insight.
Its latest Landlord Trends survey found that 63% of landlords described demand in their local markets as either “very strong” or “quite strong”, compared with 58% in the first quarter.
This was the first quarterly rise since the first quarter of 2024, when 83% of landlords reported strong demand.
The recovery was led by an increase in landlords experiencing the highest levels of demand. The proportion reporting “very strong” demand rose by seven percentage points to 29%, while 34% described it as “quite strong”.
The proportion reporting “average” demand fell from 29% to 23%, while 5% said demand was weak.
Pegasus Insight’s figures show that the proportion of landlords reporting strong demand declined from 83% in the first quarter of 2024 to 82% in the second, 79% in the third and 77% in the fourth.
The figure continued to fall during 2025, reaching 61% in the final quarter, before touching a low of 58% in the first quarter of this year.
The improvement comes as the supply of homes in the private rented sector remains under pressure. Previous Landlord Trends research has found that landlords are considerably more likely to sell rental properties than to buy 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.
“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.”
