Landlord survey shows demand moderating after period of strong growth
Tenant demand for rental properties across the UK has moderated over the past year, according to new research from mortgage market specialist Pegasus Insight.
The research firm’s Landlord Trends report for the second quarter of 2025 found that 71% of landlords described tenant demand in their local areas as “strong,” with 33% rating it as “very strong” and 39% as “quite strong.” This marks a decrease from 82% in the same period last year.
Four percent of landlords reported “weak” demand, while 18% said demand was “average.”
The report attributes the slowdown to a range of factors, including a return to more typical demand levels after a period of heightened activity. The previous surge was driven by limited rental supply, post-pandemic migration patterns, and ongoing challenges in affordable housing. While demand remains above historical averages, the recent decline could influence rental growth, yields, and investment decisions in some regions.
The data highlights significant regional variation. Yorkshire & Humber recorded the highest proportion of landlords reporting strong demand at 81%, with 36% describing it as very strong. In contrast, London and the East Midlands reported lower figures at 64% and 63%, respectively.
Several trends may be contributing to the shift. Nationally, about one-third of students now live at home, a figure that is even higher in London and parts of the Midlands, reducing pressure on local rental markets. Affordability constraints are also leading more tenants to remain in their current homes, share accommodation, or stay with family, especially in areas with higher rents. Additionally, the rise of remote and hybrid working has enabled tenants to move further from traditional commuter locations.
The cooling of tenant demand may also affect mortgage brokers, who could see slower buy-to-let activity and fewer new landlord clients. Brokers specialising on buy-to-let mortgages are likely to focus on regions with stronger demand and advise clients on affordability and evolving tenant preferences.
“Even after an 11% drop, over seven in 10 landlords are still seeing strong tenant demand, which shows just how competitive the rental market remains,” said Bethan Cooke (pictured), director at Pegasus Insight.
“However, the fact that demand has eased for the first time in a while suggests we may be at a turning point. For landlords, this could mean less scope for rent increases in some areas, especially where affordability is already stretched.
“That said, demand levels remain far above those of five years ago, and the fundamentals of the Private Rented Sector are still solid. The question is whether this is the start of a sustained rebalancing between supply and demand, or just a short-term pause in the face of wider economic pressures. Either way, landlords and lenders will be watching closely.”
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