The Impact of Buy to Let Residential Investment on Local Housing Markets: Evidence from Glasgow, Scotland

Abstract

ABSTRACT The advent of the ‘buy to let’ (BTL) phenomenon in the UK, apart from producing a new wave of individualized rental market investment, has been widely judged to be a speculative and destabilizing force in the housing market. This paper provides a detailed empirical investigation of new residential investment in one city (Glasgow) where BTL has made a relatively large impact. In seeking to overcome data problems, the study employed qualitative (expert interviews and a landlord survey) and quantitative methods (census, the Register of Sasines, standardized house price information and modelling thereof) in order to assess the nature and scale of BTL, the motivations of investors and its impact on the private housing market. The evidence suggests that while Glasgow is in many respects different to rental markets elsewhere in the UK and although the investment has thus far largely occurred in a benign environment, the context for future investment, on balance, looks sustainable (i.e. favourable changes to pension planning law and the maturing market for BTL). Long-term market impact is an empirical question that depends on the specific interactions of market niches or segments (i.e. the first-time buyer market for apartments) with potential buy to let investment. Our conclusion, to borrow a Scottish legal term, is that BTL induced volatility is ‘not proven’.