Demand for rental properties is at the highest level recorded since the first quarter of 2016, a new survey carried out by the National Residential Landlords Association shows.

A total of 39% of landlords in England and Wales reported an increase in demand in Q2 2021, up from 31% in Q1.

NRLA says a “two-tier” rental market is continuing to develop as well, with the majority – over 60% – of landlords in Yorkshire and the Humber, the South West and South East and Wales registering rising demand.

The majority of landlords in Central London, at 53%, however, said demand had fallen versus 15% who said the opposite. The NRLA confirms that London is the only region in England and Wales to have seen rents drop in real time in the 12 months to July 2021.

Meanwhile, 55% of landlords believe their business will be ‘negatively affected’ by the response to covid – 78% in Central London saying so and 81% in Outer London. Landlords in the Yorkshire and the Humber are the least pessimistic on this front, with 49% agreeing with this statement.

And just 14% of landlords wish to add to their portfolios compared to 19% in Q1 2021. The number looking to divest has moved in the opposite direction, climbing from 17% to 20% across the first two quarters of this year.

NRLA policy director Chris Norris comments: “The evidence is clear that nationally whilst the demand for homes to rent is increasing, landlords are more reluctant to invest in new properties.

“The only losers will be tenants as they struggle to find the homes to rent they need. The chancellor needs to recognise the harm being done by tax hikes imposed on the sector.

“It is clear there is a significant flight of tenants from the capital in response to the covid pandemic. With lockdown restrictions having ended, and offices beginning to reopen, the jury is out as to whether this trend will continue.”