The number of landlords planning to sell up as a result of buy-to-let tax changes has dropped.

Paragon Mortgages’ latest Private Rented Sector Trends report found that last year, the proportion of those expecting to sell property reaching its highest ever level at 25%, but this month’s survey of landlords recorded a drop to 17%.

Instead, the proportion of landlords willing to purchase buy-to-let property has grown to 13%, up from a record low of 9% 12 months ago.

Of the 204 landlords interviewed, 94% described tenant demand as stable or growing, with fewer than one in 30 suggesting a decline.

Among landlords expecting to purchase, 62% were seeking terrace houses, 31% wanted flats or maisonettes and 23% sought semi-detached properties.

John Heron, managing director of Paragon Mortgages, said: “With no material improvement in the supply of new housing against a background of strong population growth and household formation, it is no surprise that landlords are continuing to experience strong rental demand. It is promising therefore that there has been some improvement in landlord buying intentions albeit from a low base.

“Any boost this gives to improving supply to the sector, however, needs to be balanced against the additional upward pressure that we are likely to see in rents as a result of the phased impact of the changes to the taxation of rental income.”