EXECUTIVE SUMMARY
- This report presents the results of a study of the views and experiences of landlords in Scotland. The information comes from two surveys: first, a questionnaire survey of the landlords of approximately 1,500 dwellings statistically representative of the private rented sector in Scotland; second, follow up focus groups with 90 of these landlords.
Who are Scotland's landlords?
- A large majority of dwellings are owned by individuals and couples;
- Only a small proportion are owned by full-time business landlords, although a large proportion of dwellings are owned for business and investment reasons;
- A very large majority of dwellings have landlords who first started letting in Scotland after rent deregulation
Acquiring and managing dwelling portfolios
- The great majority of the sample dwellings were acquired through purchase with equity or with loans, very few through other ways such as inheritance;
- Landlords said that one in six dwellings were HMOs but that a significant minority of these were not licensed
- Portfolio sizes are small with very few sample dwellings being parts of portfolios in excess of 20 dwellings;
- Most dwellings have landlords who draw only a small proportion of their total income from letting;
- Half the dwellings are managed wholly by the landlords themselves.
The most recent letting
- The great majority of lettings were made in 2006 or later. Indeed, nearly half were made in 2008. Hardly any had been made before rents were deregulated in 1989.
- The vast majority of tenants of these most recent lettings signed a written contract; only four per cent had a verbal agreement.
- Three-quarters of the most recent lettings involved a short assured tenancy. However, one in seven respondents said that they did not know what kind of tenancy was used for the most recent letting.
- Lettings that were owned by private individuals and couples, by landlords for whom letting was a sideline activity undertaken for non-investment reasons, or by landlords that had only one letting in Scotland, were more likely than other types of landlord to say that they did not know what type of tenancy had been used for the most recent letting. Overall, one in seven landlords did not know what type of tenancy was used.
- The tenants of nine out of ten recent lettings paid a deposit, rent in advance or both.
- Where tenants were charged a deposit, in three-quarters of cases the amount was equal to one month's rent.
- Three-quarters of respondents said that the tenant of the most recent letting was not in receipt of Housing Benefit ( HB) or the Local Housing Allowance ( LHA) at the start of the tenancy.
- The majority of landlords - over eight in ten - use a credit check or some form of reference prior to letting, but most settle for one single type of check.
- Over eight in ten landlords carry out an inventory, with nearly half of landlords taking inventories at both the beginning and end of a tenancy.
- Very few landlords (7 per cent) have difficulties in gaining access to their properties.
How the previous letting ended
- In the great majority of cases (over 8 out of 10), the tenancy before the most recent one had been brought to an end by the tenant rather than by the landlord. Possession orders are used to end around 1 in every 100 tenancies.
- The great majority of tenants told the respondent beforehand that they were leaving.
- About one half of respondents said they returned the last tenant's deposit in full when they left the property.
- The reasons for not returning the deposit in full were damage, because the property was not clean enough, rent arrears, and unpaid bills.
- Among respondents who said that the deposit was not repaid in full, three-quarters reported that the tenant had not disputed the decision.
Letting preferences
- Seven out of ten respondents reported that, in general, they preferred not to let their accommodation to tenants who are on Housing Benefit or the new Local Housing Allowance. However, almost three out of ten said they had no preference either way.
- Three-quarters said that the type of tenant they would most prefer to let their accommodation to was working people. Seven per cent said they most preferred students and 14% said they had no preference.
- When asked which type of household they most preferred to let their accommodation to, two-fifths said they had no preference. One in five reported that they most preferred single people aged 25 or more and a further fifth that they preferred childless couples. Only one in ten most preferred households with children.
- Three-quarters of respondents said they had no preference either way when asked whether or not they preferred to let their accommodation to workers from the eastern European countries that had recently joined the EU.
Letting to homeless people
- A third of respondents said they would consider probably or definitely letting their accommodation to homeless families if the rent was guaranteed; over half would either probably not or definitely not consider it.
- Three out of ten respondents reported that they would consider letting their accommodation to homeless single people if the rent was guaranteed; three-fifths of respondents would not consider it.
- Two-fifths of respondents said they would consider letting their accommodation to homeless families if the rent was guaranteed and the council managed it on their behalf. About one half of respondents would not consider it.
- Over a third of respondents reported that they would consider letting their accommodation to homeless single people if the rent was guaranteed and the council managed it on their behalf. Approximately a half would not consider it.
Attitudes to letting
- Two-fifths of respondents agreed that 'The law adequately balances the interests of landlords and tenants today'; a third disagreed with this statement.
- Seven out of ten respondents agreed that 'Tenants generally look after their accommodation'; one in five disagreed with this view.
- Three-quarters of respondents agreed that 'Tenants are generally good at paying the rent on time'; one in six disagreed.
- Three-quarters of respondents agreed that 'The law allows landlords to charge a reasonable rent these days'; less than one in ten disagreed.
- Seven out of ten respondents disagreed with the statement that 'Landlords find it difficult to fill their vacancies'; but about one in eight agreed with it.
- Only one in five respondents agreed with the statement that 'Landlords are adequately protected by the law against tenants refusing to leave'. Meanwhile, just under half disagreed with this statement and a third were not sure.
- A third of respondents agreed that 'Landlords find it difficult to find out how the law affects them', while just under half disagreed and a fifth were not sure.
- About one in seven respondents agreed with the view that 'Landlords have a lot of disputes with tenants over the return of deposits'. Over half of respondents disagreed and three-tenths were not sure.
- About one in seven respondents agreed that 'Many tenants behave in an anti-social way to other tenants or neighbours', but three-fifths disagreed. One in five respondents were not sure.
- About half of the respondents agreed with the statement that 'The requirements of the statutory Repairing Standard are reasonable'. Two-fifths were not sure and less than one in ten disagreed.
- In summary, most respondents had fairly positive attitudes in relation to these statements about letting. The one exception was about the law protecting landlords against tenants refusing to leave: although opinion was divided on this matter, the most common response was a negative one.
- A substantial minority of respondents said they were 'not sure' when asked whether they agreed or disagreed with the ten statements about letting today. This suggests that they were not well informed about the lettings market.
Advice, training and professional bodies
- Landlords mainly use agents, their own friends and their solicitors for advice, making only modest (and mainly minimal) use of other sources of information;
- Only half the dwellings belonged to landlords who were members of relevant trade bodies or professional institutes or local council fora or accreditation schemes;
- Over half of dwellings have landlords who are not interested in receiving training on managing accommodation for letting.
Future intentions
- Almost all dwellings would be relet if they became vacant unless it was the landlord's only dwelling and where they were owned by part time or sideline non investor landlords and in rural areas;
- Most landlords do not expect their portfolios to change in the next two years. However, a larger proportion of dwellings had owners expecting their portfolios to grow in the next two years than had owners who expected them to decline.
Views of focus group landlords
- Individuals had become landlords for a wide variety of reasons and, although most now own their portfolios for investment purposes, this had not necessarily been the reason for becoming a landlord in the first place;
- The great majority of landlords stressed the need to restrict acquisitions to properties near where they lived in order to use their local knowledge and physical presence to help manage risk;
- Our survey data confirms that landlords live (or their businesses are located) very close to their properties. Our analysis of the sample shows that the median distance between landlord address and property address is just over 3.5 km. Those landlords that use managing agents live further away from their properties;
- Finding tenants was not difficult, although there was evidence that in some areas oversupply was making it more difficult to fill vacancies quickly than in the recent past;
- Landlords generally had positive experiences of housing migrant workers from the A8 accession countries in Europe;
- It was unlikely that many landlords would want to house homeless families even under initiatives whereby councils guaranteed rents and took on property management;
- There was much criticism of the new UK-wide policy arrangements for housing benefit with many landlords saying they would now only house those on benefit as a last resort;
- Few landlords had had difficulties over deposits or regaining possession but there were many complaints about problems when seeking possession through the courts;
- Local councils were subject to extensive criticism in terms of landlord registration, HMO licensing, the administration of housing benefit, and addressing of anti social behaviour;
- Landlords generally felt optimistic about the future although few were likely to grow their portfolios substantially.