Landlord portfolio and investment survey

In December 2023 SAL conducted a survey of its landlord members to find out about the size of their rental property portfolios and how this has changed/will change over time, along with the reasons behind their investment decisions. Many of the survey questions were repeats of questions asked in a previous survey in December 2022.

The headline findings from the survey are that the size of the private rented sector is reducing and will reduce dramatically over the next 5 years, and that there has been a huge increase in the number of landlords doing mid tenancy rent increases.

We had responses to the survey from 697 landlord members who own 5480 properties, an average of 7.9 properties per landlord. Based on an extrapolation of data from this survey and a similar survey we conducted in December 2023 of our letting agent members, we estimate that SAL members are involved in owning or managing approximately 159,300 properties in Scotland, 47% of the 340,000 properties in the Scottish private rented sector.

Survey findings were as follows:

1. There has been a significant increase in the proportion of landlords planning to reduce their portfolio size in the next 5 years. 56% of respondents are now planning to reduce their portfolio size (this time last year it was 44%). Only 9% of respondents are now planning to increase their portfolio size (this time last year it was 13%). In February 2022 when we asked a similar question about plans for the next 10 years, these figures were 34% and 19% respectively.

2. Those responding to the survey reported having already withdrawn an average of 6.4% of their properties from the sector during 2023. Extrapolating this figure across the whole of the private rented sector in Scotland suggests that around 21,760 homes (6.4% of 340,000 homes) could have been lost from the sector in the last year and not yet reflected in landlord registration figures due to the three-year renewal cycle.

3. When asked about their reasons for withdrawing properties from the sector, the most common reasons given were (figures in brackets are from the December 2022 survey):

Perceived hostility towards landlords from government/politicians – 83% (78%)

Concern about proposal to introduce rent controls – 75% (61%)

Increasing regulation in the sector – 74% (63%)

4. Landlords were asked how they will go about withdrawing their properties from the market. For 58% of properties the landlord will serve notice to evict their tenants. For 29% of properties the landlord will wait until the tenants choose to move out. Just 22% will be sold to another landlord with tenants in place.

5. 45% of respondents have done rent increases on their tenanted properties during 2023. The previous survey in December 2022 revealed that prior to the rent freeze just 8% of landlords increased their rent on an annual basis.

6. 72% of tenants are paying rent below market value (in December 2022 this was reported to be 54%). 23% are paying more than 20% below market value (in December 2022 this was reported to be 13%).

7. 59% of respondents have a mortgage on at least one of their rental properties. 9.7% of properties now have outgoings (including any mortgage repayments) which exceed the rental income.

These findings paint a very concerning picture for the future of the private rented sector and it is certain that the Cost of Living (Tenant Protection) (Scotland) Act 2022 has contributed significantly to landlords’ plans to exit the sector and their more assertive approach to rent increases. It is the most vulnerable in society who will suffer from a reduction in the size of the private rented sector and increasing rents.

The survey findings have assisted with SAL’s response to a Scottish Government call for evidence seeking information on the impact of the measures on private landlords and those involved in the provision of private rental accommodation.

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