Depending on how quickly it gets through Parliament, the Renters Reform Bill will be shaking up the private rented sector in the next few years with a number of changes designed to make things fairer for landlords and tenants. In addition to the abolition of Section 21, one of the biggest changes the government plans to make is the discontinuation of fixed tenancy terms. That’s right — no more six-month or 12-month rentals; once the Bill passes, all tenancies will be on a periodic, monthly rolling basis, with a two-month notice period for tenants wishing to leave.
That’s all very well for the majority of the private rented sector, but how about student accommodation, a subsector where tenants have very specific needs given that they spend part of the year at university and part of the year at home? Let’s discuss the issues and what could happen.
Why would periodic tenancies be bad for student housing?
Students typically sign 12-month contracts. That way, both parties know how long the student will be in the accommodation and when they will be moving out. This makes it easier to market the property to the next cohort of students as it is guaranteed that it will be available for the next academic year. It also provides the landlord with guaranteed income for those 12 months, allowing them to plan their finances for the future.
With the switch to periodic tenancies, landlords no longer have the certainty that a student will be in place for a full year. This makes things particularly difficult for groups of students wishing to live together in an HMO, as the landlord cannot guarantee that all rooms in the house will become available at this same time. If a student does move out during the academic year, it could be difficult to find a replacement.
The student sector is already under a lot of pressure, with more students than available tenancies. By 2025, the UK is expected to face a shortfall of 450,000 beds for students as a result of the amount of new housing being unlikely to match the number of new university attendees. Organisations like The National Residential Landlords Association (NRLA) think that the Renters Reform Bill in its current form will exacerbate this.
Are there arguments for allowing students to use periodic tenancies?
According to critics like the National Union of Students (NUS), the current 12-month tenancy model is restrictive to students. What if they run into trouble during their tenancy and have to move out due to property disrepair or antisocial behaviour? Is it right for them to have less flexibility than those in regular Assured Shorthold Tenancies, which can be anything from six months to no minimum term? The NUS argues that because many students live together with non-students, creating an exemption for student lets could lead to some members of a household having fewer rights than others — a situation that could be untenable.
What’s the future for student housing?
The government knows this is an issue, as it has provided a carve-out in the bill for purpose-built student accommodation (PBSA). However, this is only for accommodation providers who have registered with a government-approved code of practice, leaving the hundreds of private rented sector landlords that let to students out in the cold. Many think that what’s required is a full exemption for the student sector regardless of building type or size.
Before the Bill was published on 17 May 2023, the NRLA, the British Property Federation and various universities wrote to Ministers with their concerns and asked for fixed-term agreements to be allowed for student lets. The UK’s think tank for higher education, the Higher Education Policy Institute, echoed this recommendation.
On 23 May 2023, The Telegraph reported that Michael Gove was considering an amendment to the Bill to allow student housing to use fixed-term tenancies. However, with Gove expected to move in the next Cabinet reshuffle, this is by no means guaranteed. We await the Bill’s second reading in Parliament in September to see what happens.
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