The proportion of landlords reporting strong tenant demand has risen for the first time since early 2024 – although they still remain significantly more likely to sell than buy.

Almost three in ten landlords now report very strong tenant demand, up seven percentage points in three months, according to research from Pegasus Insight. Its Q2 research reveals that 63% of landlords now describe tenant demand in the areas where they let as either ‘very strong’ or ‘quite strong’, up from 58% in Q1. The proportion describing demand as ‘average’ has fallen from 29% to 23%, while just 5% say demand is weak.

Pegasus reports that the proportion reporting strong demand had fallen steadily from 83% in Q1 2024 to 82% in Q2, 79% in Q3 and 77% in Q4. It then fell further through 2025, reaching 61% by Q4 and a low of 58% in Q1 2026.

Pressure

The improvement in demand comes as the supply of rental homes remains under pressure, with its Landlord Trends research showing that landlords are considerably more likely to sell rental properties than buy them.

Its Q2 report show that sales activity for the next year runs at over seven time the level of expected purchasing (43% vs. 6%). However, it adds that intent to sell is consistently overstated compared with actual divestment activity; only 22% sold in the last 12 months vs. the 38% who said they were intending to sell in the next year in Q2 2025.

About six in 10 landlords have a market exit timeline in mind; 9% plan to divest and exit in the next 12 months, while 43% may have exited in the next five years.

It’s particularly notable that the tenant demand increase is being driven by landlords reporting very strong demand, says Mark Long, founder and director of Pegasus Insight (pictured left). “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 adds: “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.”

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