After two years of falling demand, new research suggests the rental market could be turning a corner, with more landlords reporting strong tenant demand and rents continuing to rise.
There is some encouraging news for UK landlords this month.
After a prolonged period of declining tenant demand, the latest research suggests renters are becoming more active again, providing a positive signal for landlords heading into the second half of 2026.
According to the latest Landlord Trends research from Pegasus Insight, 63% of landlords now describe tenant demand in their area as either very strong or quite strong.
That is up from 58% in the previous quarter and represents the first quarterly increase in reported tenant demand since the beginning of 2024.
For landlords, the direction of travel is particularly encouraging.
Tenant demand is moving in the right direction
The increase may appear modest, but it marks a notable change after two years of declining demand.
Even more encouragingly, the number of landlords describing demand as 'very strong' increased from 22% to 29%.
Only 5% of landlords now describe tenant demand as weak.
For landlords with good-quality properties in desirable locations, stronger demand could mean more enquiries when a property becomes available and greater confidence when reviewing rental values.
Rental supply remains tight
The improvement in tenant demand is happening while the supply of rental properties remains relatively limited.
Zoopla's latest rental market data found that there are still around 25% fewer rental homes available than before the pandemic. Average UK rents for new lets reached £1,321 in June, an annual increase of 2.1%.
However, rental growth varies considerably across the UK.
More affordable areas are generally seeing stronger rental growth, while some of the more expensive markets are experiencing slower increases as affordability limits how much tenants can pay.
For landlords, this makes understanding the local rental market increasingly important.
What does this mean for landlords?
The latest figures don't mean landlords can simply increase rents and expect tenants to accept any price.
Instead, they suggest a healthier rental market where demand remains supportive but tenants are still conscious of affordability.
For landlords, stronger demand could mean:
- Fewer void periods
- More enquiries when a property is marketed
- Greater confidence when reviewing rents
- Strong demand for well-presented homes
- More opportunities to retain good tenants
Zoopla also reports that average earnings are currently growing faster than rents, helping to improve rental affordability.
This means landlords still need to provide good value.
A property that is well maintained, competitively priced and professionally marketed is likely to remain attractive to tenants.
A positive outlook for landlords
The latest RICS survey also provides some encouraging signals. While tenant demand was broadly flat in the three months to July, 28% of respondents expect rents to rise over the following three months. At the same time, landlord instructions remained negative, suggesting rental supply could remain constrained.
If rental supply remains limited while demand holds up, landlords with desirable properties could continue to benefit from a relatively supportive market.
The key is to focus not simply on achieving the highest possible rent, but on minimising voids, retaining good tenants and maintaining the quality of the property.
What should landlords do now?
The latest figures provide a good reason for landlords to review their portfolios.
Review your rent: Compare your current rent with similar properties available locally and make sure it remains competitive.
Focus on presentation: Good photography, maintenance and overall presentation can help a property stand out.
Prioritise tenant retention: Keeping a reliable tenant can be more valuable than constantly finding new ones. Good communication and a well-maintained property can help.
Review your strategy: With tenant demand showing signs of improvement and supply still constrained, it may be worth considering whether your portfolio is positioned to take advantage of current market conditions.
The rental market may be turning a corner
After two years of declining tenant demand, the latest figures offer landlords a welcome change in direction.
With 63% of landlords reporting strong tenant demand, rents continuing to rise in many areas and rental supply still below pre-pandemic levels, the outlook is becoming more encouraging.
It doesn't mean every property will automatically attract tenants or that rents will rise everywhere.
But for landlords with well-managed, appropriately priced properties, the second half of 2026 could provide a more positive rental market than we've seen over the past couple of years.
Tenant demand is back on the rise, and that's worth paying attention to.
WeChat
