Tenant demand reached a five-year high in Q4 2020, according to Paragon Bank.
Data collected by the lender shows that 32% of landlords reported increasing levels of tenant demand during the final three months of the year, the highest level since Q1 2016.
This figure was up from 29% reported in Q3 2020 and 25% recorded in Q4 2019.
On a regional basis, the number of landlords reporting the greatest rise was in the South West, with 58% outlining an uptick.
This was followed by the West Midlands, with 48% of landlords reporting an increase in demand.
In contrast, just 10% of landlords in Central London outlined a rise in tenant demand.
Despite a rise in demand, 64% of landlords said they have no plans to change rental prices, 15% said they will increase rents and 9% intend to lower them.
In addition, landlords said they felt more confident about rental yields, their capital gain, the UK private rented sector and their own letting business than they did during the same period in 2019.
Overall, 35% of landlords rated the prospects for their own lettings business as good or very good during Q4 2020, compared to 30% in the previous quarter and 31% during the same period in 2019.
The research is based off of the results from 800 landlords and was conducted by BVA BDRC.
Richard Rowntree, managing director of mortgages of Paragon Bank, said: “We saw a clear upturn in tenant demand in the second half of 2020 after restrictions on the housing market were lifted.
“The strong levels of people looking for rented property continued during the final quarter, which may be related to renters wanting to secure a new property ahead of any new lockdown restrictions, which of course came from November onwards.
“The housing market is also reporting high levels of tenancy renewals, so good quality rental property is at a premium in desirable markets. I would expect that to continue into the new year and throughout 2021.”
“Despite the pressures on landlords due to volatile economic conditions and rising unemployment hitting tenants’ income, confidence is strong and robust.
“Tenant demand is playing a key role in that.”