Over the past five years, the private rented sector (PRS) has become a significant asset class for institutional investors in the UK. One of the main determinants of returns from residential investment property is the income obtained from tenants’ rent. Income return is affected by several factors, including residents’ satisfaction and their loyalty (in renewing their lease). The ease with which a landlord can let vacant property also depends upon their reputation, the desirability of the neighbourhood, the rental terms and the properties themselves.

This paper analyses more than 5000 interviews with PRS tenants in the UK, conducted over a four-year period, to investigate determinants of resident satisfaction, loyalty (lease renewal) and willingness to recommend their landlord. Statistical analysis is performed using respondents’ ratings of satisfaction with many aspects of their occupancy as explanatory variables. Comparisons are made between interviewees who renew their lease and those who do not renew.
The research finds that “ease of doing business” with their landlord is a strong predictor of residents’ satisfaction, loyalty and advocacy. Tenants who perceive they receive ‘poor’ or’ very poor’ value for money for their rent at mid-term interview are nearly four times more likely not to renew their lease. Other key indicators for lease renewal include maintenance, rent collection and the moving-in process. Tenants’ willingness to recommend their landlord depends mainly on their relationship with their landlord, how the landlord compares with tenants’ previous landlords, the processes of moving in and moving out, lease renewal terms and the provision of communal services.

This research should help to improve the landlord – tenant relationship in the Private Rented Sector.