72% of landlords?

Chris Luxon, via Q+A:

“72% of all landlords are Mum & Dad investors… they are not evil property speculators”

This is attracting a lot of comment, because it can be interpreted as two quite different claims: either that the landlord of a randomly chosen rental has a 72% chance of being a “Mum & Dad investor” or that a randomly chosen person or corporation who is a landlord has a 72% chance of being a “Mum & Dad investor”.  Mr Luxon presumably means the latter, which is the more natural statistical interpretation, though (and this is a frequent Statschat theme) not necessarily the most relevant number to the policy question at hand.

Strictly speaking, we don’t have data on the fraction of  landlords who are Mum & Dad investors or evil property speculators. No-one makes landlords report whether they have children, whether they own property for speculation or investment, or even whether they are evil.  Some landlords might be evil and have children and not be speculators!  However, if we follow Kirsty Johnston a few years ago in the Herald in dividing up landlords by the numbers of properties they own, it turns out that (a) most of the actual people who own homes don’t own a lot and (b) the occasional people who each own a lot of homes collectively own a lot of homes.

Proportion of properties owned by people who own

One property – 27.1 per cent
Two properties – 13.2 per cent
Three properties – 6.5 per cent
Four to six properties – 10.7 per cent
Seven to 20 properties – 9.7 per cent
More than 20 properties – 9.4 per cent

Of the people who own more than one property, 52% own only two and 70% own two or three.

The word ‘people’ is important here: homes are also owned by companies.  Companies are definitionally not Mum & Dad investors, but they also aren’t necessarily evil property speculators.  The largest in that Herald story was Housing New Zealand, as it then was, who had 60,000 rental properties, and the category would include some other non-profit providers.  At least some of the people who don’t like landlords feel differently about community housing providers.

And, finally homes are owned by trusts, which is a much more difficulty category to survey, since there isn’t a centralised registry of beneficiaries of trusts. The Herald didn’t even hazard a guess.

So, there’s plenty of room for Chris Luxon’s claim to be largely true. Most landlords are probably small-scale, but the small proportion who aren’t will still add up to a lot of rentals.  However, he almost certainly doesn’t have reliable population data about either the parental status or moral alignment of landlords. Nor is it clear that the typical portfolio size of landlords should be decisive in deciding how to tax and regulate them.  Mum & Dad takeaways still need to follow food safety rules.