Optimism among landlords has improved modestly over the past 12 months and suggests confidence is returning to the market following a turbulent 18 months, as buy-to-let investors gain a greater understanding of the pressures they are likely to face and developing strategies to mitigate at least some of the impact, especially when it comes to tax relief changes, according to Paragon Mortgages’ latest PRS Trends Report for Q1 2017.

The study, which is based on interviews with 203 experienced residential landlords, found that 78% of landlords now understand the personal implications of the tax relief changes being phased in from yesterday, up 8% from 71% in Q4 2016.

This increase in understanding is paired with the fact that just 7% of landlords now insist that they do not understand the implications, down from 11% in Q4 2016, while the percentage of landlords requiring more information has fallen to 13% from 18%, which is a further indication that landlords are preparing for the impact of the changes.

John Heron, managing director, Paragon Mortgages, said: “It’s encouraging to see that the PRS has not been negatively impacted to the degree that had been widely predicted, despite some turbulence over the last couple of years. This increase in understanding combined with effective financial planning may be the key drivers behind a steadier picture in terms of overall optimism amongst landlords.

“However, we remain cautious, as landlords will not be fully impacted for some years yet and, whilst we have been able to track a modest recovery in confidence since 2015, the sector is still some way off its peak; the PRS is finely balanced and will remain so for some time.”