title: Canny Investors? A mixed methods investigation into the investment behaviours of Scottish private rented sector landlords
Creators: name: Watson, Andrew Robert
Publisher: name: University of Glasgow
Year: 2024

description: From a low base, the Scottish Private Rented Sector (SPRS) has grown rapidly over the last 25 years and now plays an important role in Scotland’s housing provision and wider economy. The re-growth, which mirrors changes in the rest of the UK, has been enabled by deregulation (amongst other drivers) and driven by a large group of heterogenous private investors, who tend to own a small number of properties each. Whilst much has been written about the characteristics and motivations of these ‘landlords’, the Scottish data is now aged and little is known about landlord investment behaviours in the context of normative and descriptive theories of investment. This is concerning given that these characteristics, motivations and behaviours account for the landlord’s selection of the SPRS as a welfare strategy and govern their management of and future exit from the investment. They are also more broadly responsible for shaping the SPRS and the experience of the tenants who reside there. As such, the data shortfall has far-reaching implications, which are particularly stark for policymakers seeking to further regulate the sector whilst minimising unintended outcomes.

To address these shortcomings, this thesis first refreshes the extant literature pertaining to landlord characteristics and motivations, and thereafter, addresses the gaps in the literature relating to landlord investment behaviours. The latter is achieved through the development of a theoretical framework and conceptual framework suitable for the study of landlord investment behaviour and its application, via a synthesised normative investment process, to the SPRS to better understand investment practices. Specifically, the framework is used to identify the extent to which the investment behaviours of Scottish landlords deviate from established normative theories of investment behaviour and subsequently, the extent to which these deviations mirror established descriptive theories of investment behaviour.

Grounded in the research philosophy of pragmatism, the research adopts an explanatory sequential mixed methods design. In the first stage, primary quantitative data relating to landlord characteristics, motivations and investment behaviours is obtained via an online survey of Scottish landlords. In the second stage, more in-depth primary qualitative data focused on understanding landlord investment behaviours, is obtained via semi-structured interviews carried out with a sample of Scottish landlords and SPRS professionals.

With regards the characteristics and motivations of landlords, the research finds some change in the composition of the SPRS, such as an increased incidence in the number of female landlords. And whilst the sector continues to be dominated by small-scale private landlords, an increasing number of landlords view their SPRS holding as some form of investment. With regards to the investment behaviours of landlords, the research finds that landlords often deviate from normative expectations and more specially the normative investment process. In essence, these deviations suggest that investment assets worth in excess of £30bn1 are not being effectively managed, with far-reaching implications for the Scottish economy. More specifically, the findings highlight a clear risk to the efficacy of landlord SPRS investments. A number of failings, such as the lack of budgeting for key investment risks, also have broader implications for tenants and policymakers alike.

In place of a normative approach, the investment behaviours and decision-making processes of landlords often more closely reflect descriptive theories of investment behaviour as evidenced by landlord’s susceptibility to behavioural biases and heuristics.

This thesis concludes that the interests of landlords, tenants and policymakers would be better served by landlords adopting investment behaviours, which are more closely aligned with the normative investment process. To this end, a number of recommendations have been included, based upon the process’s key stages. In addition, to allow policymakers to more readily account for the investment behaviours of landlords in the policy creation process, a new landlord typology is proffered. While focused on the SPRS, these findings are likely to have much wider relevance, certainly to the wider UK PRS, but also in other geographies accustomed to neo-liberal housing policy and dualist rental systems.