Systematic review: Landlords’ willingness to retrofit energy efficiency improvements

Abstract

Energy efficiency of privately rented homes is poorer than that of owner-occupied properties in many countries across Europe, North America and Australasia. Small-scale private landlords are the key decision makers for energy efficiency improvements for most rental properties. These landlords’ energy efficiency retrofit decisions are poorly understood. This paper aims to synthesise existing research examining small-scale landlords’ energy efficiency decisions. A systematic review was conducted according to the specifications of the PRISMA checklist. Sixteen academic and grey literature databases were searched, with 16 papers eligible for inclusion in the review. From these papers, a total of 47 factors were identified that potentially influence landlords’ willingness to retrofit. The strongest available evidence relates to financial factors, which were more frequently studied than other factors. However, the wide range of factors identified in this review indicates that retrofitting in rental properties is not a purely financial consideration. Complexities in managing rental properties; landlord-tenant relationships; landlords’ values, beliefs, and knowledge; and property market factors were all found to affect retrofitting. The paper highlights the need for landlord-specific energy efficiency research, particularly to confirm the influence of many factors in different social and regulatory contexts. A conceptual model of landlords’ energy efficiency retrofitting behaviour is proposed.

Introduction

More than a fifth of all energy consumed globally is used to power homes (IEA, 2007). Household energy use is influenced by householders’ behaviour and by property features including airtightness, insulation, and the efficiency of energy-consuming appliances such as hot water systems or air conditioners. Due to the longevity of housing stock, measures to improve the energy efficiency of existing homes are critical to reducing residential energy use in developed countries (Rogelj et al., 2018). Many countries have introduced policies to increase energy efficiency of new and existing homes (Bukarica and Tomšić; Kerr et al., 2017). However, global residential energy use remains higher than it was in 1990 and continues to climb (IEA, 2007; U.S. Energy Information Administration, 2019).

Energy efficiency in rental properties is lower than in owner-occupied homes or social housing (Davis, 2010; Gillingham et al., 2012; Melvin, 2018). Rental properties are also less likely to have solar photovoltaics (Sommerfeld J, Buys L, Mengersen K, & Vine D, 2017). This is increasingly problematic as private renting occupies a large and growing share of the residential sector in many countries across Australasia, Europe, and North America (Martin et al., 2017). A review of 10 countries found that private renting was the second largest tenure, after owner-occupation, in nine countries (the largest tenure in Germany), and renting was increasing in seven of those countries (Martin et al., 2017). When governments have offered incentives for energy efficiency improvements, they have been accessed disproportionately by owner-occupiers compared to owners of rental properties (Charlier, 2015). For example, rental properties made up only five per cent of all homes retrofitted using the UK’s Green Deal finance (Department of Energy and Climate Change, 2015). Similarly, rental properties accessed less than seven per cent of all ceiling insulation in an Australian rebate program, despite making up nearly thirty per cent of homes (Commonwealth Coordinator General, 2009). Regulations that require homeowners to declare energy efficiency ratings to sell or rent a property generally find lower compliance in rental markets than in sales markets (Fuerst and Warren-Myers, 2018).

In addition to greenhouse gas impacts, tenants’ health, mortality, and financial wellbeing can be adversely affected by energy-inefficient rental housing. Thermally inefficient homes endanger the health of residents who are vulnerable to the effects of cold and mould, including older people (Cheng et al., 2018; Mercer, 2003) and those with respiratory conditions (Chapman, Howden-Chapman, Viggers, O’Dea and Kennedy, 2009; Preval et al., 2017). Tenants are more likely than homeowners to experience energy hardship, the inability to either pay energy bills or to access basic energy services such as maintaining a comfortable indoor temperature (Azpitarte et al., 2015; "Fairer Safer Housing," 2018).

Understanding landlords’ energy efficiency behaviour is crucial to improving energy efficiency in the private rental sector because landlords are the primary decision-makers for energy efficiency retrofits in rental properties. However, the motivators and constraints on landlords’ energy efficiency retrofitting are less well understood than those of owner-occupiers or landlords who own commercial properties. Since the seminal work by Jaffe and Stavins (1994), energy inefficiency in rental properties has been framed predominantly as a principal-agent problem, the result of a misalignment of landlords’ and tenants’ economic interests. However, scholars such as Ambrose (2015) and Gabriel and Watson (2012) argue that insufficient attention has been paid to the broader range of influences on landlords’ energy efficiency decisions.

In recent years, numerous scholars have examined the reasons that landlords choose to retrofit, or not to retrofit. These studies examine different elements of landlords’ retrofit behaviour. Some take an economic perspective and test the impact of principal-agent problems (Burlinson, 2017), property market factors (Adan and Fuerst, 2015) or landlords’ and tenants’ willingness to pay for energy efficiency improvements (Franke and Nadler, 2019; Phillips, 2012). In contrast, some studies take a social psychological approach to landlords’ energy efficiency behaviour, with an emphasis on factors such as values, attitudes, and social norms (Gabriel and Watson, 2012; März, 2018). Still other studies take a sociological approach and highlight the importance of the social and financial constraints on different landlords and tenants (Ambrose and McCarthy, 2019; Horne et al., 2016). The findings generated by these different approaches have not yet been synthesised to establish the breadth and depth of the existing literature, or to assess the consistency of findings across studies.

Systematic reviews provide a reliable and reproducible method for synthesising the literature on a specific topic and identifying gaps in that literature (Xiao and Watson, 2017). Systematic reviews can form a foundation to develop a conceptual background for future research, and for testing or generating theories (Paré et al., 2015). Systematic reviews also aid in establishing whether findings are consistent and generalisable in different settings (Mulrow, 1994). Previous reviews have examined construction of new buildings (Munaro et al., 2020; Yu et al., 2020), energy efficiency retrofitting of buildings (Jagarajan et al., 2017; Yeatts et al., 2017), predictors of household energy consumption (Frederiks, Stenner and Hobman, ; Jones et al., 2015; Lévy and Belaïd, 2018), and sustainable consumer decisions (Bangsa and Schlegelmilch, 2020). To the authors’ knowledge, no reviews have yet systematically examined the factors that influence landlords’ willingness to install energy efficiency retrofits. This study seeks to fill that gap.

In addition to policies that directly shape housing quality and tenure, such as tenancy laws and energy efficiency policies, the provision and quality of rental housing is influenced by social and regulatory institutions such as the structure of finance systems, industrial relations, and taxation provisions. Although cultural and regulatory differences in housing exist between, and even within, countries, the trajectories of housing have been similar for most developed countries in recent years (Gilbert, 2016). In English-speaking countries, these institutions have been defined by market liberal policies since the 1980s, resulting in casualisation of the workforce, financialisation of housing and minimal policy support for home ownership, all of which have contributed to a growth in rental housing that is owned by small-scale private landlords (Burke et al., 2020). Conversely, the housing sectors of many Western European countries in the post-war period were defined by highly regulated private renting and provision of social housing but have shifted to housing markets similar to those in market liberal countries with most households now living in owner-occupied or privately rented homes and the majority of rental properties owned by small-scale private landlords (Burke et al., 2020; Gilbert, 2016).

While the housing markets of Western European and English-speaking market liberal countries are now similar, housing markets can be markedly different in countries with different wealth, state ownership of housing, or social expectations such as family-based housing support. This review forms part of a larger study of landlord energy efficiency behaviour in Victoria, Australia. Australia typifies the trajectory of housing markets in English-speaking market liberal countries (Burke et al., 2020). To ensure relevance for future policy development in Victoria, this review aims to incorporate all research that examines small-scale landlords’ willingness to retrofit in geographical and jurisdictional settings practically comparable to Australia. Studies were not excluded based on housing stock or climate because the review is concerned with landlords’ energy efficiency behaviour rather than the effectiveness of new technologies or specific retrofit items in different conditions.

While economic models have dominated thinking about landlords’ energy efficiency decisions, owner occupiers’ energy efficiency decisions have been examined through a variety of lenses. Research examining householders’ energy efficiency behaviour focuses on owner-occupiers and renters, but excludes landlords. Models of household energy efficiency behaviour have been developed from psychological, sociological, and technological, as well as economic perspectives (Sovacool and Hess, 2017; Vasseur et al., 2019; Wilson and Dowlatabadi, 2007). To guide the emerging interdisciplinary research stream of landlords’ energy efficiency retrofitting, we propose a preliminary conceptual model of landlords’ energy efficiency behaviour inspired by the conceptual model of household energy behaviour constructed by Frederiks et al. (2015b). Frederiks’ model is an integrated model of energy behaviour that attempts to capture micro and macro level influences on renters’ and owner occupiers’ energy behaviour. Similarly, our preliminary model of landlords’ energy efficiency retrofitting incorporates micro and macro level factors and categorises them as situational, dwelling characteristic, or individual, with individual factors further categorised as sociodemographic or psychological. The conceptual model serves as an organising tool for the existing knowledge about landlords’ energy efficiency retrofitting. Incorporating different categories of influences in one model may help to overcome the tendency of researchers and policymakers to prioritise economic and technological factors over social factors (Keirstead, 2006), and within social factors to prioritise psychological factors over situational ones (Wilson and Dowlatabadi, 2007).

This paper systematically reviews the existing academic and grey literature to answer the question: What factors have been identified as influencing energy efficiency retrofitting by small-scale private landlords who own residential rental properties in developed countries? Papers were identified by a systematic search using preregistered criteria to ensure the inclusion of all published work that addresses this question.

This paper begins by introducing the models that have been used to understand energy efficiency behaviour. Second, it outlines the methods used to identify the relevant landlord literature, extract factors that influence landlords’ willingness to retrofit, and synthesise those factors so as to support the development of a conceptual model of landlords’ energy efficiency behaviour. Next, it provides an overview of the existing literature. Then, the factors that increase and decrease landlords’ willingness to retrofit are presented and discussed, followed by a discussion of those that have conflicting evidence. Finally, a preliminary conceptual model of landlords’ energy efficiency behaviour is proposed and discussed, highlighting research gaps and policy challenges.