The relationship between the

determinants of rental housing

satisfaction and considering
moving in Finland
Karen M. Gibler
Real Estate, Georgia State University, Atlanta, Georgia, USA, and
Tanja Tyvimaa and Juha Kananen
Construction Management and Economics, Tampere University of Technology,
Tampere, Finland
Abstract
Purpose The purpose of this paper is to discuss the relation between dissatisfaction with
housing conditions and considering moving among residents of Finnish rental multifamily buildings.
The paper examines physical attributes, socioeconomic factors, and subjective opinions related to
housing conditions and satisfaction with housing.
Design/methodology/approach Logistic regression analysis is used to examine survey data to
analyse which factors contribute to dissatisfaction with the housing unit and the apartment building
and whether dissatisfaction is related to consideration of moving.
Findings The findings indicate that dissatisfaction with the building and individual housing unit
are associated with greater probability of considering moving. Satisfaction with kitchen, living room,
storage, and building age are the most important indicators of satisfaction with the housing unit, and
satisfaction with living room, bathroom, storage, and building age are associated with satisfaction
with the apartment building. These are the areas in which landlords could invest in renovations to
increase satisfaction in an attempt to reduce turnover.
Research limitations/implications The study is conducted with Finnish data only. The sample
is not a representative sample of the Finnish population. A longitudinal study would be needed to
determine whether dissatisfied residents indending to move actually change residence.
Originality/value This study is the first of its kind in the Finnish housing market. It tests a general
model that has been suggested to be customized to local conditions. In addition, much of the research
on this topic is more than 20 years old. Examination of the model under current housing and
socioeconomic conditions is necessary to determine if relationships have changed over time.
Keywords Housing, Housing satisfaction, Rental housing
Paper type Research paper
Introduction
Turnover in rental housing is a major concern for landlords because of the negative
impact on investors profits. When a tenant vacates a rental housing unit, the landlord
incurs costs through search for a new occupant, refurbishment of the unit (painting,
cleaning, decorating), and lost rent while the unit is vacant. If turnover can be reduced,
then costs are reduced, and profits increased. Tenants also suffer costs from turnover,
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0263-7472.htm
Property Management
Vol. 32 No. 2, 2014
pp. 104-124
r Emerald Group Publishing Limited
0263-7472
DOI 10.1108/PM-02-2013-0009
The data for this analysis come from the Finnish research project, ALMA housing-related
service structures, which seeks to understand the residential areas and residents changing
service needs. The main sponsor of the research project is Tekes, the Finnish Funding Agency
for Technology and Innovation.
104
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32,2
including search, moving, and establishing new services. While landlords will never be
able to control for all the factors leading to turnover (tenant job change, change in
marital status, birth of children), if dissatisfaction with physical features and services
offered by the apartment building contributes to the intention to move, then owners
may be able to alter the building and its services to increase satisfaction, and, thereby,
reduce tenants propensity to move. At the same time, they will increase tenant welfare.
The largest rental apartment owner in Finland, VVO, recorded resident turnover
at 20.9 per cent in 2011 (VVO, 2012). This means that about one-fifth of tenants are
expected to move each year. Because one-half of Finnish movers stay in the same
neighbourhood ( Juntto, 2007), many are changing their housing unit, but not their
geographic location. Therefore, landlords should have the opportunity to retain many
of these movers rather than losing them to nearby competitors if they know how to
increase resident satisfaction, saving residents the cost, and disruption of moving. The
purpose of this paper is to examine the reasons for Finnish tenant dissatisfaction with
rental multifamily housing and the relationship between tenant dissatisfaction and the
intention to move.
Even though satisfaction and moving intentions have been studied in various
contexts in other markets, most of this research was conducted more than 20 years
ago and no academic studies have examined Finnish tenants and their satisfaction
with housing. Only one Finnish survey ( Juntto et al., 2010) being conducted at the same
time as this study has identified the housing characteristics with which tenants are
dissatisfied, but their results were released subsequent to the start of this study and
they do not examine differences among customer segments nor the relationship
between satisfaction with specific unit characteristics and overall satisfaction with the
apartment or building. Because consumer housing preferences and norms vary across
markets along with housing design and construction materials, the relative importance
of tenant and housing characteristics in determining housing satisfaction and moving
intention may also differ (Kellekci and Berkoz, 2006; Mohit and Nazyddah, 2011), which
points out the need for study in this geographic area. This study aims to fill part of
the knowledge gap in the Finnish context. The Finnish housing market is interesting
for this type of study because most of the Finnish housing stock was built in the
1960s and 1970s (Statistics Finland, 2012) and so is in need of renovation. If tenant
satisfaction is related to intention to move, and if renovations can be designed to reduce
tenant dissatisfaction, then owners may be able to retain tenants longer, making the
payback period for renovation costs shorter. Such changes will also lead to more stable
living conditions for Finnish residents.
This paper is organized as follows. First we introduce the model of tenant mobility.
Then we discuss research about the relationship between tenant satisfaction and
mobility. Next, we introduce our data and methodology. Finally, we present our results
and discuss the implications for both landlords and tenants.
Literature review
Research that focuses on household mobility is centred around environmental stress
and push-pull models that have been evolving since the 1960s to provide the context
in which the household and the housing unit are evaluated to determine the level
of disequilibrium, the consideration of moving, and the ensuing decision as to how to
achieve equilibrium. Relevant factors include household socioeconomic characteristics,
housing preferences, the physical structure, neighbourhood location, price, and
availability of alternatives. Weinberg et al. (1981) suggest that a significant incentive to
105
Determinants of
rental housing
satisfaction
move may arise from disequilibrium regarding specific housing features such as the
interior space and quality.
Disequilibrium in housing is expressed through resident dissatisfaction, which may
create a propensity to move. Amerigo and Aragones (1997) present a conceptual
framework in which to examine how a person interacts with the residential environment,
leading to residential satisfaction or dissatisfaction. Each individual can be described
in terms of socioeconomic and personal characteristics as well as housing experience
and preferences. These influence the individuals evaluation of the objective attributes
of a residential environment. The resulting subjective interpretation of the objective
residential environment leads to the personal level of satisfaction. The objective attributes
represent all salient housing unit, neighbourhood, and community characteristics.
Satisfaction indicates a high degree of agreement between actual and desired housing
attributes. Dissatisfaction, which results from disparity between housing aspirations and
reality, will lead to adaptive behavioural intentions or actions to either modify the housing
or move. In this way, housing and neighbourhood satisfaction measures have been used
as an indicator of potential residential mobility (Djebarni and Al-Abed, 2000) and
residential satisfaction has been shown to be an intervening variable in determining the
desire to move (Speare, 1974).
Based on these well-established models, we derive the model in Figure 1 that
illustrates how resident interaction with housing results in perceptions about how well
the housing satisfies needs and wants. If the house (unit or building) does not meet
expectations, then the resident will be dissatisfied to some degree. As dissatisfaction
increases, the resident is more likely to consider moving; however, intervening
variables (such as lease obligations, lack of financial resources, or lack of alternatives)
may prevent the tenant from acting on the intention to move. Even if the tenant has the
ability to move, landlords may be able to limit dissatisfaction through providing
housing with objective characteristics that more closely match what tenants prefer,
which should lead to higher tenant retention.
Factors contributing to housing dissatisfaction
Housing satisfaction is a complex construct influenced by both environmental and
socioeconomic variables. Housing satisfaction studies, therefore, have tested a number
of different variables to represent the residents socioeconomic characteristics, housing
Subjective attributes of
housing
Housing
satisfaction

Mobility
intentions
Adaptive
behavior
Personal
characteristics
Objective attributes of
housing
Source: Adapted from Amrigo and Aragons (1997, p. 48)
Figure 1.
A systematic model of
residential satisfaction
106
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32,2
and neighbourhood characteristics, and residents perceptions of those characteristics.
Perception has been emphasized because researchers believe that the residents
perceptions rather than the actual residential conditions are what determine satisfaction,
so objective measures of housing attributes alone will not be able to explain satisfaction
(Lu, 1999).
The subject of housing satisfaction attracted researchers attention during the 1970s
with studies that focused on the importance of physical structures to housing satisfaction.
Early studies (Davis and Fine-Davis, 1981; Galster and Hesser, 1981; Newman and
Duncan, 1979) identify the relationship between housing satisfaction and satisfaction
with physical attributes such as structural quality, plumbing, heating, and number of
bathrooms, as well as satisfaction with the neighbours, proximity to relatives, and
conditions of roads and surrounding property. Lu (1999) finds higher satisfaction
associated with adequacy of space, higher percentage of income spent on housing,
and higher housing value. In one of the most recent studies on the subject, James (2007)
finds dissatisfaction associated with structural problems through noise intrusion. While
some physical structure characteristics may universally affect housing satisfaction, the
relative importance may vary because of climate, living arrangements, social norms, or
changes in expectations over time. The studies of the importance and perception of
physical characteristics in contributing to housing satisfaction are generally dated with
only James (2007) examining the subject in the last decade. Newer research is needed to
incorporate changes in building standards and design in many residential markets.
Because satisfaction is derived from person-environment fit, the characteristics of
the residents must be considered in conjunction with the housing, neighbourhood, and
community attributes. Individual household characteristics such as socioeconomic
attributes as well as lifestyle characteristics may be useful in identifying housing
expectations and preferences against which the housing unit and its neighbourhood
environment are evaluated. Numerous socioeconomic characteristics are found to
correlate with higher satisfaction in empirical studies of owners and renters in the
USA, Ireland, and Malaysia. These include sex (Basolo and Strong, 2002), marital status
(Lu, 1999), children (Lu, 1999), age ( James, 2008; Tan, 2012), and income (Lu, 1999).
Length of tenure is also associated with satisfaction although the direction of causality
can be questioned (Tan, 2012). Adriaanse (2007) cautions that the outcome of these
models may differ among countries as a consequence of specific housing market
characteristics and socio-cultural traditions. Thus, research is needed in each market to
determine the salient socioeconomic characteristics. There is also a possibility that as
populations and living arrangements change over time that the lack of recent studies
may have missed changes in the relationships between demographic factors and housing
expectations and satisfaction.
Relationship between housing dissatisfaction and expected mobility
Speare (1974) argues dissatisfaction is a necessary intervening variable between
resident and housing characteristics and mobility predispositions and behaviour.
The only research that tests this relationship was conducted during the 1980s. McHugh
et al. (1990) find housing and neighbourhood satisfaction directly related to expectation
of likelihood of moving in the next year among renters. The likelihood of moving is
positively related to presence of children and household income, but negatively related
to household size, space index, and year the dwelling unit is built. Similarly, Landale
and Guest (1985) find housing satisfaction is directly related to seriously thinking
about moving. They also find that age (younger), tenure (renter), change in household
107
Determinants of
rental housing
satisfaction
size (smaller), and income (higher) are related to the likelihood of thinking about
moving. Their findings indicate that structural variables, including position in the life
cycle (age and change in household size), financial constraints (income), and community
attachments (housing tenure and proportion of friends in the area), influence thoughts of
moving over and above the effects of residential satisfaction.
Thus, to understand the likelihood of mobility, previous research suggests that one
must understand the relationship between residents and their housing and how that
leads to dissatisfaction, an intervening state that encourages residents to consider
moving. While structural housing characteristics and resident socioeconomic
characteristics are found to correlate with housing satisfaction, the relationships and
relative importance appear to vary among countries because of differences in populations
and housing stock. Therefore, the relevant housing and resident characteristics must
be identified in each market. In addition, much of the research on this topic is more than
20 years old. During the intervening decades, changes in demographics, living
arrangements, social norms, and housing standards may have affected the strength of the
relationships found between these variables and housing satisfaction. Examination of
the model under current housing and socioeconomic conditions is necessary to determine
if relationships have changed over time.
Data and methodology
To examine the relationship between housing satisfaction and intention to move, data
were collected via an online questionnaire in early 2011. The survey was open to
all Finnish-speaking residents of Finland on the internet. The survey was promoted
on the web sites of the research project sponsors (rental apartment investors and
managers). A total of 807 responses were gathered from homeowners and renters
around Finland, but mainly from the Helsinki metropolitan area and the Tampere
region. This paper uses data from the 338 respondents who were living in a rental
multifamily building in a city centre or in a suburb (few live in rural areas).
A comparison to 2007 data from Statistics of Finland ( Juntto et al., 2010) indicates
the sample in this study appears to contain a disproportionately large number of
middle-aged and small number of older residents compared to Helsinki tenants. Thus, our
analysis may not reflect the full range of opinions among the oldest tenants, but it does
provide reasonable distribution across age ranges. Our sample is also overrepresentative
of larger households containing three or more people and underrepresentative of people
living alone, which may be related to the age distribution of the sample. Therefore, the
results may be limited in terms of the range of opinions among single-person households.
The overrepresentativeness of larger households is also reflected in the size of the units in
which respondents live. Our sample from multiple urban areas contains a relatively low
number of tenants living in studio apartments and high number living in units with three
or more rooms compared to Helsinki apartment dwellers in 2011 according to Statistics
Finland. However, Helsinki is the most expensive city in Finland, so a higher percentage
of tenants would be expected to live in smaller units than in less expensive cities included
in this sample. A comparison of the sample to respondents to a survey of residents
of non-subsidized rental housing in Helsinki indicates our respondents include more
residents who have lived in their current units for three years or less, so our analysis
better reflects the satisfaction and moving intentions of tenants who have are less settled
in their current housing data ( Juntto et al., 2010).
The purpose of this study is to examine whether the hypothesized relationships in
the model between socioeconomic characteristics, housing attributes, and perceptions
108
PM
32,2
of housing attributes are related to tenant dissatisfaction and whether that
dissatisfaction leads to an intention to move. To accomplish this objective requires a
sample of tenants from a variety of socioeconomic backgrounds living in different
housing configurations, some of whom are satisfied and others who are dissatisfied
with their current residential environment. This sample provides such a range of
residents, which makes comparison among groups of residents possible. Because it
is not a representative sample of the Finnish population, we cannot extrapolate to
estimate the number of tenants who are dissatisfied or the percentage of the population
who are considering moving. We can, however, identify the relationships that lead to
dissatisfaction and considering moving among different groups of tenants in the major
metropolitan areas.
Respondents to the survey were asked to:
.
provide socioeconomic and current housing information;
.
rate how satisfied they are with rooms and features in their present apartment
and apartment building;
.
rate how satisfied they are overall with their unit and building; and
.
tell whether or not they are considering moving within the next 12 months.
Using the conceptual framework shown in Figure 1, we examine one alternative for
adjustment in response to lack of person-environment fit: mobility intentions.
We use a logistic regression model (similar to Clark and Ledwith, 2006) to estimate
the probability of a resident being satisfied with the apartment (unit) and the apartment
building using objective characteristics and subjective evaluation of housing features as
predictors. Logit models are frequently used in research on migration behaviour and
residential mobility (Barcus, 2004).
The probability can be expressed as:
PY
1
1 e
Z
where P(Y) is the probability that resident i is satisfied, e is the base of natural
logarithms, and Z represents a series of predictor variables and coefficients such that:
Z b
0
b
1
X
1
b
2
X
2
b
n
X
n
e
i
The odds ratio:
^
p
1
^
p
e
b
0
e
b
1
X
1
e
b
2
X
2
e
b
n
X
n
Is the ratio of the predicted probability (
^
p ) of resident i being satisfied to the predicted
probability of not being satisfied. The coefficients estimated by this specification are
measures of the change in the ratio of the probabilities. The logistic regression model is
then defined as:
ln
^
p
1
^
p

b
0
b
1
X
1
b
2
X
2
b
n
X
n

where ln
^
p=1
^
p

logit, which is the natural logarithm of the odds. The b
i
parameters estimated by the logistic regression reflect the impact of the vector of
109
Determinants of
rental housing
satisfaction
independent variables (X) comprised of socioeconomic characteristics, housing unit
and building characteristics, and satisfaction with housing features on the dependent
variables, overall satisfaction of the resident with his or her housing. The model is
estimated using the maximum likelihood method, which selects coefficients that make
the observed values of the dependent variable most likely to have occurred. We use
the Hosmer-Lemeshow goodness-of-fit test as to whether the observed data were
significantly different from the predicted values in the model to assess the adequacy of
the fit of each model. Thus, we want a non-significant value for this test. A Wald
statistic is used to test the significance of each independent variable in estimating the
likelihood of a resident being satisfied with current housing:
Wald
2

b
SE

2
The Wald statistic follows a w
2
distribution and reveals whether a coefficient is
significantly different from zero and in this way is analogous to the t-tests used in
linear regression (Field, 2000). We use follow-up Krushal-Wallis tests to determine
where the significant differences lie among the levels of the predictor variables.
Because the results from housing satisfaction research vary among countries
(Adriaanse, 2007) and no published research had been conducted on housing
satisfaction in rental multifamily buildings in Finland prior to the start of this study,
we do not have an a priori list of which characteristics are related to satisfaction.
To identify the appropriate variables to include in the final analysis, we create several
logistic models, each with a narrow scope of covariates, to determine which covariates
we should include in the final model. The models for satisfaction with the housing unit
and the building are fitted separately, first with the socioeconomic variables, then
with the housing unit and building variables, and finally with the satisfaction with
specific housing features variables. Then the models for satisfaction with the unit and
the building are fitted with the significant variables from each of the earlier models.
The level of dissatisfaction with the current housing unit and building are expected
to lead to behavioural intentions in terms of considering moving. Residents who express
higher levels of dissatisfaction should exhibit a higher probability of considering moving.
The relationship between overall satisfaction with the apartment unit and the building
with consideration of moving is examined with a classification table and w
2
test.
Variables
The socioeconomic characteristics of the respondents are presented in panel A of Table I.
We use the previous research to identify the attributes to include in our models: sex,
marital status, household size (children), age, income, and length of tenure. We also test
one variable that has not been identified as correlated with housing satisfaction:
educational attainment. The ages of the respondents range from 19 to 79 with an average
of 39, with just over one-half between the ages of 30 and 54. For the analysis, age is
converted to a categorical variable. Just over one-third of the households report a monthly
income of h1,401-h2,900 and few report an income of 4h4,400. One-third of respondents
report that they are single and 22 per cent report they are widowed or divorced.
Cohabiting partners who are not married are separated from the married couples and
labelled as COHABIT. For education, SECONDARY includes both current students
and those who have completed secondary school; VOCATIONAL have finished vocational
training; POLYTECH and UNIVERSITY are graduates of their respective schools.
110
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Number % n
Panel A: socioeconomic characteristics
Age 330
AGEo30 117 35.5
AGE30-54 171 51.8
AGE454 42 12.7
Household income 315
INCo1,401 87 27.6
INC1,401-2,900 117 37.1
INC2,901-4,400 68 21.6
INC44,400 43 13.7
Marital status 336
MARRIED 75 22.3
COHABIT 75 22.3
SINGLE 111 33.0
DIVORCEWIDOW 75 22.3
Education 336
SECONDARY 49 14.6
VOCATIONAL 83 24.7
POLYTECH 135 40.2
UNIVERSITY 69 20.5
Household size 338
HHSIZE1 127 37.6
HHSIZE2 126 37.3
HHSIZE3 85 25.1
Sex 335
MALE 78 23.3
FEMALE 257 76.7
Length of tenure 338
LENGTHo1 72 21.3
LENGTH1-3 130 38.5
LENGTH4-9 80 23.7
LENGTH49 56 16.6
Panel B: housing characteristics
Building age 338
BLDGo1959 44 13.0
BLDG1960-69 36 10.7
BLDG1970-79 60 17.8
BLDG1980-89 65 19.2
BLDG1990-99 72 21.3
BLDG2000-12 61 18.0
Floor 314
FLOOR1 52 16.6
FLOOR2 74 23.6
FLOOR3 85 27.1
FLOOR4 50 15.9
FLOOR5 53 16.9
Unit type 334
STUDIO 70 21.0
(continued )
Table I.
Summary statistics
111
Determinants of
rental housing
satisfaction
The most common level of educational attainment (40 per cent) is polytechnic school
graduate. Households containing three or more people are placed in one category
(HHSIZE3 ). One-quarter of respondents live in a household with three or more people.
Three-quarters of the respondents are FEMALE. Nearly 60 per cent of respondent have
lived in their present apartment less than three years, but 17 per cent have lived in the
same home for more than nine years.
Apartment and building characteristics are summarized in panel B of Table I.
Previous research suggests we should include variables to measure structural quality,
noise intrusion, plumbing, heating, number of bathrooms, floor space, price, and
neighbourhood. Structural quality would be reflected in the building materials. We use
building age to represent the design and materials used in the building and unit.
The building age is categorized by the decade in which it was constructed with the
exception of BLDGo1959 that represents any building constructed prior to 1960 and
BLDG2000-12 that contains buildings constructed over a 13-year period. Location
within the building would affect the residents view as well potential street noise and
privacy. We include the floor on which the unit is located from ground (FLOOR1)
through a top category of floor five or higher (FLOOR5 ). Unit type reflects both the
size of the apartment and its functionality. Almost one-half (47 per cent) of the residents
are living in two-room units and 21 per cent in studios, so we combine units with three
or more rooms in one category (THREEROOM). We also have a direct measure of
the floor space in the unit. The average size of the apartments is 56.3 square metres.
For neighbourhood, residents indicated whether they live in the city centre or a suburb,
with two-thirds of the respondents living in a suburb. There is not a measure of price in
the survey. It is rare for Finnish apartments to contain more than one bathroom, so that
measure is not included.
The theory suggests that satisfaction is related both directly to objective measures
of socioeconomic characteristics and housing attributes as well as indirectly through
the residents subjective evaluation of the housing attributes. Therefore, we include a
series of measures of the residents subjective evaluation of how well the living room,
kitchen, bathroom, bedroom, and storage, the major spaces in Finnish apartments,
serve their purpose. Satisfaction with each room is measured on a four-point scale
(very satisfied, fairly satisfied, fairly unsatisfied, and very unsatisfied) as shown
in Table II. While more than 40 per cent are very satisfied with their living room and
bathroom, only 20 per cent are very satisfied with storage. The respondents to this
survey express greater satisfaction with how well their kitchen serves it purpose than
the tenants in non-subsidized Helsinki apartments who were asked about their kitchen
amenities by Juntto et al. (2010). Similarly, these respondents express greater
satisfaction with how well the bathroom serves its purpose than Helsinki residents
Number % n
TWOROOM 156 46.7
THREEROOM 108 32.3
Location 338
CENTER 110 32.5
SUBURB 228 67.5
Mean SD
SIZE (square metres) 56.3 19.3 336 Table I.
112
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32,2
questioned about satisfaction with bathroom condition. Both groups express similar
levels of dissatisfaction with storage. To ensure sufficient observations across levels
of the room satisfaction variables, very unsatisfied and fairly unsatisfied responses are
combined into one category of unsatisfied, resulting in three levels of responses used
in the analysis[1].
The dependent variables for the logistic regression are based on two questions from
the survey. One asks how satisfied the resident is with the individual apartment
and the other asks the level of satisfaction with the entire building using the same
four-point scale as for individual room satisfaction. Overall, most residents responding
to the survey are either very satisfied (34 per cent) or fairly satisfied (46 per cent) with
their unit, a smaller percentage than among Helsinki residents of non-subsidized
apartments ( Juntto et al., 2010). Overall satisfaction with the apartment building is
lower than with the unit with only 23 per cent very satisfied and 10 per cent very
unsatisfied. Because only a small percentage of people are very unsatisfied or fairly
unsatisfied with their unit or building, these categories are combined with fairly
satisfied to create a dummy variable with two categories, very satisfied and not
very satisfied in the subsequent analysis. Resident satisfaction with the unit and with
the apartment building are highly correlated (Pearsons correlation coefficient 0.515
( po0.01)). Thus, few residents are satisfied with their apartment while dissatisfied
with their building or the reverse.
Results
The first logistic regression models are generated using only the socioeconomic
characteristics as predictors of satisfaction with the unit and the building. Because
satisfaction is derived from person-environment fit, the socioeconomic characteristics
of the residents may be associated with housing expectations and preferences against
which the housing unit and its neighbourhood environment are evaluated to develop
perceived appropriateness of housing. Table III presents the results. First we examine
the apartment satisfaction estimation. The Hosmer and Lemeshow test produces a
w
2
6.134 ( p 0.632), which indicates the predicted values from the model are not
significantly different from the observed data. Looking at the individual variables,
the only statistically significant factor contributing to satisfaction with the apartment
at the 5 per cent level is living in the current apartment from one to nine years.
Meanwhile, moderate income and household size of three or more are significant at the
10 per cent level. Households with three or more people are less satisfied with their unit
than those living alone. Further analysis will examine whether this dissatisfaction is a
related to the floor space or number of rooms in the apartment. Those earning between
Very unsatisfied
(%)
Fairly unsatisfied
(%)
Fairly satisfied
(%)
Very satisfied
(%) n
Unit/flat 5.3 14.5 46.4 33.7 338
Building 10.4 16.3 50.3 23.1 338
Living room 4.2 10.5 43.2 42.0 333
Kitchen 8.0 19.2 41.4 31.4 338
Bathroom 6.5 15.1 36.7 41.7 338
Bedroom 7.8 11.8 41.6 38.8 322
Storage 17.9 24.2 37.9 20.0 335
Table II.
Level of satisfaction with
rooms, unit, and building
113
Determinants of
rental housing
satisfaction
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Table III.
Logistic regression of
satisfaction with the unit
and building using
socioeconomic
characteristics as
predictors
114
PM
32,2
h2,901 and h4,400 per month are more likely to be satisfied than the lowest income
residents. They can afford a better unit than those available to the lowest income.
Residents who have lived in their current apartments for less than one year are more
likely to be satisfied with the unit than those who have lived in their apartments for
one to nine years, reflecting that they have recently adjusted their housing to better
match their preferences, which illustrates the difficulty of identifying the direction
of causality between length of tenure and satisfaction as identified by Tan (2012).
Thus, we find some similar relationships to studies by Lu (1999), but the analysis
does not indicate that all socioeconomic characteristics found to be significant in other
studies (Basolo and Strong, 2002; James, 2008) are related to satisfaction among this
sample. This may be a consequence of specific Finnish housing market characteristics
and socio-cultural traditions as suggested by Adriaanse (2007).
The Hosmer-Lemeshow test for the building satisfaction model containing
socioeconomic predictors produces a w
2
7.422 ( p 0.492), which indicates the
predicted values from the model are not significantly different from the observed data,
which supports the model. However, the only significant predictor is income. Again,
middle-income households appear the most likely to be satisfied with their building.
While the results indicate that some socioeconomic variables may contribute to overall
satisfaction, they are not sufficient on their own to predict satisfaction with the unit
or the building.
A second logistic regression is estimated for both unit and building satisfaction
using objective measures of the housing unit and building. Because there is multicollinearity
between size of unit in square metres and number of rooms, the regressions are estimated
with number of rooms only. The results are shown in Table IV. The Hosmer and
Lemeshow test produces a w
2
6.630 ( p 0.577) for the building satisfaction model
and w
2
3.669 ( p 0.886) for the unit model, which indicates support for both models.
Satisfaction with the unit (and to a lesser degree, the building) appears to vary with
building age, indicating residents of building constructed during the 1960s are least
likely to be satisfied with either their unit or building (significant at 5 per cent level
in both models). Buildings of this age may not yet have been renovated, so residents
neither enjoy historical features nor modern design. There is also relative dissatisfaction
among residents of units designed in the 1990s (significant at 5 per cent level). The floor
on which the resident lives affects satisfaction with the individual apartment with
residents on the fifth or higher floors significantly more likely (1 per cent level) to be
satisfied compared to residents who live on the ground floor. Those living on the second
and fourth floor are also more satisfied (10 per cent significance level). The ground floor
is more likely to suffer from street noise and lack of privacy. Location in the city centre is
positively and significantly (5 per cent level) related to satisfaction with the building.
Thus, physical characteristics of the building and its location are related to satisfaction
with the individual apartment and overall structure.
The third set of logistic regression models uses resident satisfaction with individual
rooms in the apartment as subjective attributes of the housing to predict satisfaction
with the unit and the building. Table V presents the results. The Hosmer and
Lemeshow test produces a w
2
7.126 ( p 0.523) for the building satisfaction model
and w
2
1.060 ( p 0.998) for the unit satisfaction model, which indicates support for
both models. The tests of significance on the individual variables indicate that
overall satisfaction with the apartment unit is significantly related to satisfaction with
the living room, kitchen, bedroom, and storage. Thus, not only objective attributes, but
also subjective evaluation of the individual rooms is important in understanding
115
Determinants of
rental housing
satisfaction
B
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U
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W
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1
Table IV.
Logistic regression of
satisfaction with the unit
and building using unit
and building attributes as
predictors
116
PM
32,2
overall satisfaction with the unit. Meanwhile, satisfaction with the building depends
less on satisfaction with the living room (10 per cent level of significance), but more on
satisfaction with storage (1 per cent level of significance) and the bathroom (5 per cent
level of significance). Storage is often provided in a common area even though it is
assigned to an individual. Bathrooms are, in general, more fixed as part of the building.
Due to construction regulations and investors practices in Finland, tenants are not
allowed to remodel their bathrooms. Rather, they are only remodelled when the entire
building is renovated, so the quality of the bathroom is associated with the overall
quality of the building rather than the individual unit. Thus, the residents subjective
evaluation of the bathroom affects their perception of the building. It is not perceived as
unique to individual units in the building.
Because there was no published research in Finland and little recent research on
resident satisfaction on which to base an a priori list of expected significant predictors
of satisfaction, we create models of unit and building satisfaction that include all the
variables that are significant predictors (at the 10 per cent level) in the earlier estimations
that tested socioeconomic characteristics, objective housing attributes, and subjective
housing attributes to see if a combined model including significant variables from all
three categories better explains housing satisfaction amongst Finnish residents of
multifamily rental apartments. The results are shown in Table VI.
When combined with objective and subjective evaluation of apartment and building
attributes, the socioeconomic variables (income, household size, and length of tenure)
and some of the objective building attributes (floor and location) lose their significance
in predicting the likelihood of satisfaction with the unit and the building. Satisfaction
with ones unit is shown to be related to satisfaction with the living room and the
kitchen (significant at 1 per cent level), satisfaction with storage space (5 per cent level)
as well as building age (10 per cent level). In fact, a resident who is even fairly satisfied
with the living room is more than 700 per cent more likely to be satisfied with the
Building Unit
b SE Wald Exp(b) b SE Wald Exp(b)
Living room (ref: unsatisfied) 4.519 13.913***
Fairly satisfied 0.622 0.685 0.826 1.864 0.905 0.672 1.813 2.473
Very satisfied 1.291 0.703 3.375* 3.636 1.968 0.668 8.684*** 7.158
Kitchen (ref: unsatisfied) 1.795 8.177**
Fairly satisfied 0.431 0.473 0.832 0.650 0.859 0.460 3.492* 2.362
Very satisfied 0.048 0.521 0.009 1.050 1.429 0.502 8.094*** 4.173
Bathroom (ref: unsatisfied) 6.684** 0.159
Fairly satisfied 1.666 0.678 6.047** 5.294 0.176 0.441 0.159 1.192
Very satisfied 1.698 0.673 6.357** 5.463 0.124 0.446 0.078 1.132
Bedroom (ref: unsatisfied) 2.882 4.669*
Fairly satisfied 0.591 0.614 0.926 1.806 0.978 0.565 3.000* 2.660
Very satisfied 1.017 0.632 2.593 2.766 1.240 0.574 4.669** 3.456
Storage (ref: unsatisfied) 9.787*** 7.464**
Fairly satisfied 1.113 0.400 7.751*** 3.043 0.569 0.339 2.808* 1.766
Very satisfied 1.282 0.449 8.152*** 3.604 1.108 0.411 7.286*** 3.030
Constant 4.961 0.948 27.395*** 0.007 4.484 0.829 29.290*** 0.011
n 318 318
Hosmer and Lemeshow (w
2
) 7.126 1.060
Notes: * po0.10; ** po0.05; *** po0.01
Table V.
Logistic regression of
satisfaction with the unit
and building using
satisfaction with
individual rooms
as predictors
117
Determinants of
rental housing
satisfaction
B
u
i
l
d
i
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b
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Table VI.
Logistic regression
of satisfaction with the
unit and building using
significant socioeconomic
characteristics, building
and unit attributes,
and satisfaction with
individual rooms
as predictors
118
PM
32,2
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Table VI.
119
Determinants of
rental housing
satisfaction
apartment than someone who is dissatisfied with the living room. Similarly, even
being fairly satisfied with storage results in 105 per cent greater probability of being
satisfied with the unit. Building age has a lesser effect, with those living in buildings
constructed in the 1960s 20 per cent less likely to be satisfied with their unit than those
in buildings constructed before 1960. Satisfaction with the living room and storage
are significant at the 1 per cent level in explaining satisfaction with ones apartment
building. Satisfaction with the bathroom also contributes to explaining satisfaction
with ones apartment building at the 5 per cent level of significance. A person who
is at least fairly satisfied with the bathroom is more than 500 per cent more likely to
be satisfied with the apartment building than someone who is dissatisfied with the
bathroom. The Hosmer-Lemeshow test w
2
3.367 ( p 0.909) for the building satisfaction
model and w
2
9.676 ( p 0.289) for the unit satisfaction model indicate the predicted
values from the models are not significantly different from the observed data in both
models. In general, tenant satisfaction is influenced by building age and the tenants
subjective evaluation of the adequacy of the individual rooms more heavily than most
of the objective measures of socioeconomic characteristics and housing attributes.
More than two-thirds (68 per cent) of the 338 respondents are considering moving
within the next 12 months. Table VII shows the relationship between satisfaction with the
unit and satisfaction with the apartment building with consideration of moving. While
only 44 per cent of those who rated their satisfaction with their unit very satisfied
are considering moving, 80 per cent who are less satisfied are considering moving in
the upcoming year, a significant difference (w
2
43.627, po0.001). A similar relationship
is found between satisfaction with the building and considering moving. A statistically
significant (w
2
35.472, po0.001) smaller percentage of residents who are very satisfied
with their building are considering moving. Thus, we can see that tenant satisfaction is
related to the possibility of moving, similar to the findings of Landale and Guest (1985)
and McHugh et al. (1990). The logistic regressions reveal that resident satisfaction is
more strongly related to building age and the occupants subjective evaluation of the
units rooms. If landlords want to increase satisfaction so as to discourage residents from
moving, they need to determine what features contribute to each rooms functionality and
focus their efforts in these areas. The results also point to the importance of renovating
apartment buildings before they become obsolete and potential tenants are lost to
competitors who have completed renovations, especially of the bathrooms in the units.
Conclusions
Tenant satisfaction is an important area of housing study that has been neglected for
several decades. Satisfied tenants are less likely to consider moving, which can lead to
Considering
moving (%)
Not considering
moving (%) n w
2
Total 67.5 32.5 338
Building
Very unsatisfied-fairly satisfied 75.8 24.2 260 35.472***
Very satisfied 39.7 60.3 78
Unit
Very unsatisfied-fairly satisfied 79.5 20.5 224 43.627***
Very satisfied 43.9 56.1 114
Note: *** po0.01
Table VII.
Relationship between
dissatisfaction with unit
and building and
considering moving
120
PM
32,2
reduced turnover and its associated costs, raising owners operating income. In addition,
very satisfied residents are significantly more likely to recommend a community
to friends than satisfied residents, which can attract additional tenants while reducing
marketing costs (Wylde et al., 2009). Highly satisfied tenants are great advocates
promoting the company and its services as word-of-mouth communication is a very
effective way of marketing (Bughin et al., 2010). Satisfaction also increases tenants
welfare and removes the cost of searching for and moving to a new unit so as to increase
satisfaction.
Objective measures of housing attributes alone are unable to explain housing
satisfaction (Lu, 1999). In addition, variance in housing market characteristics and
socio-cultural traditions demands that the model be fitted to the local market
(Adriaanse, 2007). In this paper, we analyse subjective perceptions along with objective
housing features and socioeconomic characteristics to gain understanding about
the key components contributing to dissatisfaction in rental multifamily housing
in Finland.
We confirm that dissatisfied residents are more likely to consider moving. Thus, if
owners can improve satisfaction, they may be able to discourage their tenants from
moving and decrease turnover. Consistent with the model adapted from Amerigo and
Aragones (1997), we find a combination of resident socioeconomic characteristics,
objective housing features, and resident perceptions of housing features contribute to
overall housing satisfaction. The socioeconomic factors appear to only indirectly affect
housing satisfaction through the residents evaluation of the housing unit and building.
Thus, studies that focus only on socioeconomic characteristics may not identify exactly
how demographics affect satisfaction. Rather than differences in housing satisfaction
being simply a direct function of variations in income or household size (presence of
children), for example, these differences may be more a function of variations in
expectations and evaluation of housing among people of different income groups
or among those who have children and those who do not have children in the
household. In addition, the socioeconomic characteristics associated with differences in
satisfaction in other markets are not necessarily appropriate for identifying differences
in the Finnish urban rental markets.
Also, there is not one physical structure in terms of size or location that is generally
associated with higher satisfaction in this study. Rather, housing satisfaction is found
to be most strongly related to satisfaction with specific living and storage areas as well
as the age of the building. Suitability of the living room, kitchen, bathroom, and storage
are especially important in determining overall satisfaction. Residents of buildings
constructed in the 1960s display the highest level of dissatisfaction. Thus, it appears
that an opportunity exists for landlords to increase resident satisfaction and decrease
the intention to move among Finnish multifamily rental apartments by renovating
buildings built during the 1960s. To improve the attractiveness of the building,
landlords should focus their efforts on plumbing renovations, which must be undertaken
for the entire building as well as pay attention to the amount of storage space, which
is often provided in a common area. A dysfunctional kitchen, on the other hand, is
perceived as a negative characteristic of only an individual apartment. Thus, the landlord
can examine which current kitchen designs and components are popular with residents
and only renovate those kitchens that are not meeting resident expectations. These
improvements represent not only an investment the landlord makes in the capital value
of the building, but also in its income producing capability of attracting and retaining
tenants. Tenant retention will result in higher occupancy and reduced turnover, which, in
121
Determinants of
rental housing
satisfaction
turn, reduces marketing costs, lower cleaning and redecorating costs, and less lost rent.
This will shorten the payback period for the renovation costs. While some tenant
turnover is evitable, a substantial proportion of the estimated 10 per cent of the Finnish
population who move locally each year may be persuaded to stay if the landlord can
improve their perception of the suitability of their apartment unit and building.
Residents benefit from these actions as well. Greater satisfaction with housing
means more life satisfaction as households are more likely to experience equilibrium
between their housing aspirations and reality. In addition, satisfaction means residents
do not need to engage in adaptive behaviour such as lowering their expectations or
moving. In this way, the resident avoids time and money expenditures on housing
search, moving, and establishing a new residence.
The limitations of a non-representative sample prevent us from estimating
the proportion of tenants that landlords may be able to retain through making the
improvements identified as important in this analysis or calculating the rate of
return that investors might achieve through such renovations. The possible
underrepresentation of older people who have lived alone in the same apartment for a
time is of limited concern because these residents are less mobile, so are not contributing
as greatly to turnover as younger singles and families. The opinions may represent those
of tenants living in larger apartments better than those living in studio units, so the
results should be used with caution when planning changes to studio apartment units.
The results underscore the need to study residents, their expectations, the housing
supply, and residents perceptions of the quality and suitability of that supply within
the context of each market. Because perception is so important in creating tenant
satisfaction, it is important for investors and landlords to understand not only quality
design and physical construction, but also consumer attitudes, tastes, and preferences.
The relationships between socioeconomic characteristics and housing preferences,
perceptions, and satisfaction appear to vary among countries and may be changing over
time. As demographics, living arrangements, social norms, and building standards
change, the strength and direction of the relationships found between these variables and
housing satisfaction may need to be re-examined to reflect current conditions.
Note
1. James (2008) and Chapman and Lombard (2006) both used somewhat similar techniques in
their work with American Housing Survey data. In the American Housing Survey,
respondents can rate their neighbourhood on a scale of 1-10. Both James (2008) and Chapman
and Lombard (2006) combined the low-end responses from one to six as one category
because a majority of respondents rate their neighbourhood seven or higher.
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About the authors
Karen M. Gibler, PhD, is an Associate Professor of Real Estate at the Georgia State University.
Dr Tanja Tyvimaa, PhD, is a Postdoctoral Researcher at the Tampere University of Technology.
Dr Tanja Tyvimaa is the corresponding author and can be contacted at: tanja.tyvimaa@tut.fi
Juha Kananen, MSc (tech), BSc (Econ) is a PhD Student at the Tampere University of
Technology.
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