The growth of private residential landlords in Edinburgh and the impact of recent changes in the policy and financial environment
Abstract
The private rented sector in the UK has dominated, shrunk to the periphery and then
re-emerged in the course of the last century. A complex set of influencing factors have
acted as gears accelerating and decelerating this form of tenure. These factors have
many sources. Some arise from government housing policy and resulting legislation,
others from tax system. The market acts as a further source: demand, supply, property
asset values, lending liquidity and policy, and general macro-economic growth and
stability are all to be found influencing the housing market and with it the private rented
sector. There have also been socio-cultural influences at play over the last century
societal perceptions towards landlords and the emergence of the property-owning
democracy psyche are two examples.
The complexity of what exactly underlies and sustains the private rented sector
presents researchers with an opportunity to investigate and seek to understand a
range of phenomenon related to this tenure and its role in housing a part of the
population. Having this understanding is important because housing represents a
fundamental need and which form of tenure will supply housing needs in future is a
highly significant. This study aims to contribute to understanding of the residential
lettings sector, specifically in Scotland, through exploring a range of aspects, reviewing
the past, evaluating the present and assessing the future.
The main conceptual approach guiding this investigation of the PRS is the market
maturity thesis. This concept which has been commonly applied to other markets and
indeed other property markets such as commercial property has not been fully
developed for application to the residential lettings sector. This research aims to begin
closing this noticeable gap through the development of a model of market maturity that
is appropriate for the residential lettings market. The model recognises that housing is
both a basic human need and an investment market.
Today’s private landlords increasingly resemble the general population in a way they
certainly did not a century ago. Whether it be those seeking a better performing
investment or those becoming a landlord through happenstance, the small-scale
landlords on whom this now significant form of tenure depends are part of the
community rather than a class apart as they once were. Seeking out the voices of these immersed subjects and hearing their interpretations of the role of the landlord
and of the changing environment in which they play this role is an important research
endeavour. That this study is set in Scotland is also highly significant as very recent
policy and legislative developments in this jurisdiction have seemingly set the private
rented sector on a different course to the rest of the United Kingdom.
As well as an extensive review of literature both contextual and theoretical, the
research includes two interview studies, one with private landlords as participants and
the other a key informant study drawing on the expertise of highly knowledgeable
professionals. A rich triangulated understanding of issues related to the Scottish
residential lettings sector is generated by this approach. Furthermore, there is a case
study conducted on Edinburgh to test the appropriateness of the proposed model and
to evaluate how far the Edinburgh market can be viewed as mature.
Overall the research finds that the Edinburgh market, and to some extent the Scottish
market as a whole has not yet reached maturity. The main reasons for this are the lack
of economic equilibrium, doubts over user acceptance and a lack of certainty over
investor acceptance among institutional investors. The proposed model proved to be
a useful starting point for testing cases; however, the need for further refinement is
recognised. The research also proposes the policy implications of the findings.