This research looks at what shapes the investment behaviour of small-scale, residential landlords. It presents new evidence on rental investment behaviour and examines the potential impacts of policy changes on landlords’ costs of supplying rental housing, along with the effects on affordability for tenants. 

Understanding what motivates landlords and their investment goals can help build a private rental sector that benefits more Australians. With the fast and ongoing growth of the private rental sector, this study makes a timely contribution to policy debates on the supply of rental housing by uncovering new evidence on patterns and drivers of rental property investment behaviour.

Key points

• The authors apply panel data modelling methods and policy simulations that model factors affecting the supply of rental housing to measure potential flow-on effects to tenant affordability.
• The median rental-investment period is two years, whereas the mean rental investment is 3.9 years. Approximately 22 per cent of rental investments are disposed of after the first year. However, around 28 per cent of rental-investment spells are still ongoing after 20 years.
• Individuals who buy or retain rental investments are in stronger economic positions than those who sell rental investment properties. People who buy or retain are more likely to be full-time employed and high-income individuals.