Why Economic Models Miss Landlord Behaviour

Dr Giulia M Mininni reflects on how traditional economic models fail to account for the influence of social ties on landlord decision-making in retrofitting.

Traditional economic frameworks are based on rational choice theory and assume that landlords make financially driven decisions to invest in energy efficiency and thermal improvements when they appear economically advantageous. However, these models overlook other critical factors, including the influence of contexts and social networks, which also shape behaviour. Retrofitting decision-making is far more nuanced and cannot be explained purely by cost-benefit considerations. The social roles of individuals, material circumstances, and connections within families and communities significantly tailor their choices. Addressing energy demand requires acknowledging that people do not act in isolation. Energy use occurs within interconnected spaces such as households, workplaces, and communities, all influenced by complex social networks. Recognising these interrelations is essential to understanding and tackling patterns of energy consumption. 

Retrofitting decision-making is far more nuanced and cannot be explained purely by cost-benefit considerations. The social roles of individuals, material circumstances, and connections within families and communities significantly tailor their choices.

From our research in Brighton and Hove, we found landlords challenged by scarce information about what to do and who to contact to ask for advice, and place-specific inhibitors, such as mistrust towards institutions, scarce service provision, and owning listed properties in conservation areas. There are several restrictions in the UK regarding heritage buildings that prevent the adoption of energy efficiency measures. Developing policies tailored to conservation areas, such as using camouflaged solar tiles on historic buildings, can help maintain the architectural integrity of such structures while enabling retrofitting solutions. This reflects the need to address place-specific characteristics often overlooked in retrofitting literature and policy frameworks. 

Landlords’ identities, personal experiences, and motivations significantly influenced their retrofitting practices. Many drew on their education and professional expertise to inform property upgrades, such as energy efficiency measures and structural improvements. For instance, a landlord leveraged his skills to educate tradespeople about damp issues, as there is a general concern about the limited capabilities of tradespeople in energy efficiency. Personal experiences also shaped their practices. For example, a couple of landlords, drawing on their experiences as student tenants, aimed to ensure thermal comfort for their student renters. Similarly, one landlady’s perspective as a mother of a student tenant motivated her to provide higher-quality accommodations, driven by dissatisfaction with poor housing conditions. These intersecting identities highlight the diverse factors shaping landlords’ approaches to retrofitting and landlord-tenant dynamics. 

Landlord retrofit practices are also tailored by various relationships, including those with family, tenants, tradespeople, letting agencies, and local authorities, with enabling and constraining effects. Family ties can serve as either resources or barriers. For instance, one landlord relied on advice from family members but encountered setbacks due to misunderstandings regarding planning permission. Conversely, another benefited from his brother’s expertise when selecting an energy-efficient boiler. Personal networks often provide knowledge, labour, and skills, as one landlady drew on her late husband’s cousin, a builder, to upgrade her property. However, for others, family relations had no direct impact on retrofit decisions. 

Landlord retrofit practices are also tailored by various relationships, including those with family, tenants, tradespeople, letting agencies, and local authorities, with enabling and constraining effects.

Relationships with tradespeople emerged as critical, with trust, access to information, and capabilities serving as key factors. Contrary to other cases, most landlords had extensive networks and positive experiences with skilled trades. However, one landlord faced challenges in trusting tradespeople and navigating transparency issues in retrofitting processes. 

Interactions with letting agencies also influenced retrofitting efforts. While some landlords found agency support beneficial, one landlady distrusted agencies, prompting her to manage her properties independently. Similarly, relations with local authorities revealed systemic barriers. Accessing government grants was often complex and inefficient, deterring landlords from pursuing such options. Trust, transparency, and streamlined processes are essential for fostering greater engagement in retrofitting initiatives. 

With a few exceptions (e.g. the Feed in Tariff for solar photovoltaic installation in 2019), the UK has struggled to implement effective retrofitting policies to address the interconnected challenges of climate change and rising living costs, particularly in the PRS. The PRS is characterised by the highest energy costs and poorest housing conditions, a long-standing issue exacerbated by policy shortcomings. Withdrawing proposals to require landlords to meet EPC grade C by 2035, for instance, shows an incomplete understanding of the problem. Specifically, policies often overlook the relational dynamics of landlords’ decision-making processes, including how financial resources are allocated and influenced by social connections. 

Our research shows that landlords are not inherently resistant to retrofitting; rather, their decisions are shaped by social relationships and integrated with broader renovation projects. Policies that recognise these relational factors could foster more effective retrofitting. Proposed measures include partial tax credits tied to renovations or inheritance, allowing retrofitting to be bundled with other property works. Centralised strategies could accommodate localised policies to address region-specific constraints, creating a framework that responds to diverse needs while promoting energy efficiency. 

Achieving net-zero goals requires a localised approach that deeply considers the characteristics of specific places. Local relationships and interdependencies are vital in fostering ecological and social sustainability. Socio-economic, built, and natural environments, along with infrastructure, resources, institutions, and policy frameworks, shape energy-retrofitting decisions at the local level. These factors form place-specific characteristics that influence capabilities, knowledge, and capacity for action. The way relationships are formed and influenced by a specific context is critical for enhancing resilience and fostering a strong sense of place yet are often overlooked in policy development.  

Achieving net-zero goals requires a localised approach that deeply considers the characteristics of specific places. Local relationships and interdependencies are vital in fostering ecological and social sustainability.

With the PRS, the challenges of “split incentives”, meaning landlords might be reluctant to retrofit as they won’t directly benefit from comfort improvements, and power imbalances between landlords and tenants make the retrofitting barriers particularly difficult to address. Further investigation into landlord-tenant social relationships could reveal additional inhibitors and opportunities influencing landlords’ willingness to adopt energy efficiency measures. Retrofitting issues within the PRS also go hand-in-hand with poor housing conditions – a recurring theme in several countries. Ensuring the implementation of housing standards is also an important factor. 

Policies overcoming retrofitting barriers should focus on relational factors rather than assuming uniform behaviours or motivations. Tailored approaches should address their varying characteristics and contexts, promoting place-based policy frameworks and recognising that landlords are a diverse group. Although our study centres on the UK, its conceptual and methodological frameworks could be applied in other countries facing retrofitting challenges, provided they adapt to the local context and adopt place-based models.