Demand in the private rented sector (PRS) hit record levels in the third quarter of this year, shows research from Paragon Bank.

Of 600 landlords surveyed, 69% said they had seen demand grow, with 36% describing this happening to a ‘significant’ level.

The South is driving most of this – a net increase of 79% was reported in by landlords in the South West and 74% in the South East, excluding London, with this metric shrinking to 59% in the North East.

In Central London, 54% of landlords saw demand increase, with 16% registering lowering demand – which is the highest of all regions in the country.

Paragon notes, however, that the script has been flipped – in Q3 2020, 16% of landlords in Central London saw higher demand and 58% saw lower demand.

Paragon managing director Richard Rowntree comments: “With this seasonal demand added to already high levels of tenant demand, we are beginning to see a shortage of property in certain parts of the PRS, which is leading to rental inflation. The sector needs to expand to meet these exceptional levels of tenant needs.

“Recognising this, lenders can assist investors with products and service that supports them in responding to the needs a diverse and growing mix of tenants.”