Knowing the Area: The Management of Market and Business Risks by Private Landlords in Scotland

Abstract

Compared with the management of social rented housing in Britain, comparatively little is known about how private landlords manage their property, despite their increasing importance. This paper reports results from a recent survey in Scotland which shows that landlords restrict the acquisition of property close to where they themselves live to manage the market and business risks they face. This is because their personal knowledge of markets is important in reducing risks, given the complexities of the sub-markets where they operate and the information asymmetries involved. The paper combines quantitative data on a large sample of properties in Scotland and their landlords, including the location of their properties and homes (or businesses), with a series of focus groups with a smaller sample to understand the reasons why most landlords live very close to their portfolios. The policy implications of the results of the surveys are also discussed.