The Private Rented Sector (PRS) plays a sizeable and critical role in the Scottish housing mix, and due to a lack of capacity in both the social housing and build to rent sectors, an increasingly important role in providing accommodation to low income and vulnerable groups. Broad concerns abound over the commodification of housing, with more specific concerns levied at PRS housing conditions, availability, rental costs, security of tenure as well as the general suitability of the PRS, both for these and other groups. Disconcertingly, the media coverage of landlords verges on sensationalism, a continued stream of policy responses from the Scottish Government that are intervention heavy and enforcement light, and an exchequer that appears to want to drive individuals from the market.
It is genuinely surprising, given the importance of the sector, that little effort has been made to understand the ‘investment behaviour’ of landlords. Particularly as it is these behaviours that determine the number of PRS properties available, their location, their condition, and to a large extent, the associated rent levels, the types of tenants housed and more besides.
What we do know, it that the PRS is a ‘cottage industry’ in which many landlords fail to make adequate returns. Though the evidence if often anecdotal, the inadequacy of returns may result in landlords ‘sweating the asset’, whereby regular rent increases or under investment in maintenance and repairs is adopted as a strategy for re-cooping income; alternatively landlords may exit the investment putting at risk existing tenancies and reducing the availability of rental accommodation; it is evident that some landlords simply respond by accepting poor returns, to their own financial detriment. None of these potential responses are sustainable or conducive to a healthy fit for purpose PRS.
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The complete lack of guidance available to landlords, who are undertaking these relatively sizeable, complex and risk exposed investments is troubling, given that the PRS is unlikely to be an appropriate investment for all investors, including some of those already invested therein.
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The lack of knowledge regarding landlord investment behaviour is a significant oversight a key omission from current PRS debates and policy actions, and represents a legitimate sociological and social problem, which justifies a robust response.
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The location for the study is Scotland, in which housing is a devolved matter for the Scottish Government and where housing policy is said to be distinct from the rest of the UK, although not as distinct as some would like. Scotland has been chosen as it has an active PRS that is subject to considerable policy intervention. However, practical reasons are paramount and the researcher is both based in Scotland and has local experience as a letting agent, landlord and tenant within the Scottish PRS.
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This research serves a number of purposes. It is intended to positively contribute to academic knowledge by addressing existing literature deficits, by applying existing theories to new settings and fields and by catalysing further discussion and debate. Secondly, to provide data which, empowers policy makers to undertake more robust policy analysis leading to sustainable policy decisions that support the operation of the sector, via more effective regulation; thirdly, to contribute to the betterment of the PRS by offering guidance which enables would-be and existing landlords to make more informed, suitable and resilient investment decisions that result in stable investment patterns for the sector.