Landlords with properties in Central London have reported the highest levels of tenant demand across England and Wales, said Paragon Bank.

The specialist buy-to-let lender said that over nine in 10 landlords (94%) with properties in Central London reported strong levels of tenant demand in the last quarter of 2022, with the remaining 6% reporting levels as stable.

The research suggests that the appeal of properties centrally located within the capital has been growing for some time since falling out of favour during the Covid pandemic, said Paragon.

In the second quarter of 2020, increased tenant demand during the previous three months was seen by just 12% of Central London landlords but this figure has risen to 90% in Q4 2022, the highest of any region across England and Wales.

Demand up across the board

The survey of over 750 landlords, carried out by BVA BDRC, shows that the overall proportion of landlords reporting increased demand during the previous three months has remained at the record high level seen in Q3 2022. This is after 65% of landlords reported that demand has increased.

Strong levels of tenant demand were also seen in the East of England and Wales, both with 92% strong demand, followed by the North East of England where nine in 10 (90%) landlords report that demand is strong.

Richard Rowntree, managing director for mortgages at Paragon Bank, said: “A lot was said about the impact of the pandemic on the Central London rental market, with a number of factors such as the rise in home working and increased desire for access to green space leading to demand for centrally located homes apparently falling off a cliff.

“While I feel that this trend was more evident amongst owner occupiers and overstated in terms of the effect on the rental market, it is nevertheless interesting to see landlords in Central London report the highest levels of tenant demand currently and during the previous three months.

“In addition, we see that the overall record high level of increased tenant demand reported in Q3 2022 continued into the final quarter of last year. This is unsurprising given the pressure on household finances and the relative affordability of rented homes, reinforcing the need for an environment that encourages investment in the private rented sector.”