Bringing new ideas to housing research

For three decades, Private Rented Sector (PRS) growth has been driven by part-time, small-scale, profit-seeking landlords in several Western nations. While the characteristics and motivations of these landlords have been examined in some geographies, far less is known about their investment decision-making, particularly their reasons for choosing the PRS over alternative investment options. This matters because these decisions shape the sector’s growth and tenant welfare. The study begins to address this gap by exploring the role of asset tangibility in landlord investment decisions, drawing on research from other investment domains. A mixed methods study was conducted, comprising an online survey of 1,033 Scottish landlords and follow-up interviews with 33 landlords and PRS professionals. Findings suggest that some landlords exhibit a bias towards the ‘bricks and mortar’ tangibility of PRS investment, which shapes risk perceptions and aspects of their investment decision-making. The findings have several implications. For landlords, there are concerns around investment efficacy; for policymakers, questions about landlord financial literacy; and for tenants, risks to their welfare from landlord decision-making. While the findings are not directly transferable, they are likely to have salience in other nations with established PRSs, including Australia, Canada, the United States, and parts of Europe.

Significant growth in Scotland’s private rented sector over the last 25 years has been led by a large number of individual lay investors/landlords who each own a smattering of properties. These characteristics, which are replicated in several countries where neoliberal housing policies prevail, have implications for the efficacy of PRS investments, but also for conditions and the stability of investment patterns within the sector. This study examines landlord investment risk awareness and behaviours via qualitative interviews with a small sample of Scottish landlords operating at the ‘bottom end’ of the market, which is disproportionately home to vulnerable groups and where some investment risks are believed to be more acute. The findings suggest that some landlords have relatively low levels of risk awareness, fail to adequately consider risk prior to investing in the PRS, have mixed success in selecting and implementing risk management and mitigation strategies, and incur significant risk-borne costs, which can limit returns.