Data published by OSB Group has revealed optimism amongst landlords in London has bounced back for the first time since the start of the Covid pandemic.

Although London’s landlords still remain less confident than in other parts of the country, the data revealed central London has recently observed a sharp recovery in tenant demand, with just one in 10 landlords reporting demand had increased in the second quarter of 2021 and 50% reporting it had increased in the fourth quarter.

Since the first lockdown in March 2020, tenant demand in London has tracked lower than the UK average.

But the new data revealed that increasingly, all UK landlords were reporting positive prospects for UK rental yields, and this was expected to remain on an upward trend.

According to OSB Group lending engagement director Roger Morris, the data is indicative of the UK’s economic recovery: “One of the biggest reasons the buy to let market in London was hit hardest during the pandemic is because a large amount of property was rented on a short-term let basis.

“During the pandemic, the demand for short-term let properties fell sharply and flooded into the long-term rental market, further impacting this fragile rental sector,” he says.

“But this more recent data shows that the economy is showing signs of positive change, with the buy to let market slowly returning as more properties go back on the short-term rental market in London as demand grows, reducing the volume of long term let properties available.”

Morris adds: “Renters that had relocated outside of London are now returning, possibly missing the city’s vitality but also in response to employers requesting staff to return back to the office.”

All regions saw a sharp increase in landlord confidence across the second half of 2021, while optimism for the private rented sector also increased.

The strongest growth in tenant demand in the third quarter of 2021 was in the South West, Yorkshire and Humber, and Central London.