Date Published: 13th September 2024
On 11th September the Government published its new Renter’s Rights Bill, which replaces the previous Renters’ (Reform) Bill. The new Bill, which will introduce radical reform of the private rented sector, will have wide-ranging impacts on the student housing sector.
Many of the features from the previous Bill have been retained, with a few notable omissions, but the new Bill includes a number of new additions.
What are the new features with most relevance to Student Housing?
Section 21 to be abolished
As featured in the previous Bill, Section 21 and fixed term tenancies will come to an end, expected from summer 2025. This will apply primarily to the off-street housing sector, and will mean a significant change in how tenancies operate.
All tenants will be on open ended tenancies with the ability to give two months’ notice from the commencement of the tenancy, so in effect the minimum term for a new tenancy will be two months. The amendment to the previous Bill requiring a minimum term of 4 months, plus two months’ notice, has been dropped.
The Explanatory Note to the Bill [Renters’ Rights (parliament.uk)] details that providers of PBSA who are part of a Government approved Code such as the ANUK/Unipol National Code, will be exempt from these provisions as these tenancies will instead be dealt with under the Protection from Eviction Act 1977.
Grounds for Possession for Students
The Bill introduces a new mandatory ground which will allow landlords renting off-street houses to full-time students to seek possession ahead of each new academic year (between June to September) as long as notice is served before the tenancy is entered into. It will apply to full-time students who occupy on either joint or individual tenancy agreements.
Redress
It will be a requirement for all residential landlords to be a member of an authorised redress scheme, and it is expected there will be single a Ombudsman rather than multiple schemes.
Landlord Database
It will be a requirement for all residential landlords and dwellings to be registered on a landlord database before they advertise or let any property, although the Government has made provision to potentially alter this requirement for niche arrangements like PBSA.
Rental Bidding
The Bill prohibits ‘rental bidding’, the inviting, encouraging or accepting of a higher rent when letting a property. Landlords and letting agents will be required to publish an asking rent for their property. They will then be prohibited from inviting, encouraging or accepting offers of rent above this price.
Decent Homes Standard
This will apply to the private rented sector, setting certain new requirements in relation to state of repair and what must be provided. Secondary legislation will be required to provide further detail.
Awaab’s Law
The new legislation which is currently being introduced in the social housing sector obligates landlords to take action within certain timescales when hazardous repairs are reported to them, and it will be extended to the private rented sector.
Investigatory Powers for Local Authorities
Local Authorities will be given new investigatory powers to enforce these and existing standards already in place, including rights to demand evidence, enter premises and levy additional fines.
Penalties
The penalties for breaching the new provisions can include fines by the Local Authority and rent repayment orders
Initial Thoughts on the Impact on Student Housing
This is a complex Bill with much of the detail still to follow in secondary legislation, however it is substantially unchanged from the previous Bill so it is possible to make some initial comments.
Many of the reforms in this Bill will strengthen rights for tenants, and this is welcomed in the context of the wider private rented sector. However elements of it are concerning for the student market.
The Off-Street Market
The Government have recognised that the student housing market works on the basis of an academic cycle, and has granted rights to landlords that will enable them to end tenancies in line with this. This was previously added as an amendment to the previous Bill, so its welcomed that this has been retained in the new Bill
However, all tenants will now be able to give 2 months’ notice to terminate their tenancy as soon as it commences. The amendment to the previous Bill, that created a de-facto minimum term of 6 months, has been shed. This means students will be able to give notice as early as they wish, perhaps in early May when exams are over, leaving the landlord with a void they are unlikely to fill until September. In joint tenancies, a single tenant giving notice could bring a whole tenancy to an end, creating disruption for their housemates who may need to find alternative housing.
Landlords faced with the prospect of 3 – 4 month void period in every 12 months, may look at their business and conclude the student market is no longer viable and move to other tenant groups. Alternatively, they may substantially increase rents to cover void periods. Unipol’s concern here is not for the ongoing profitability of student rentals, but based on the fact that 731,000 students (latest HESA figures available for 2022 – 2023 year) students live in private rented houses and flats whilst studying, if this supply falters, there is simply no ready replacement for it.
Even a small decline of the order of 10% after implementation in 2025 could see 70,000 students with no viable alternative accommodation and facing homelessness in year 2 or 3 of their degree.
The alternative to the off-street market is PBSA. This is more expensive, and for many will not be an affordable option. A wider issue is that there is not enough supply to cover any shortfall that may develop if the off-street market declines. This new academic year has seen an additional 8,500 PBSA beds open their doors in the UK, whilst the undergraduate intake increased by 5,200. Since the pandemic, the PBSA pipeline has slowed considerably, and is unlikely to be able to cater for any significant increase in demand. The student housing shortages seen in cities including Bristol and Manchester in recent years may well become the norm across the country.
An alternative to the PBSA or off-street market is staying at home and commuting to University. This is fine for students who live close to an institution that offers their chosen course and has appropriate support servies, but potentially bad luck for those with no option to travel away from home.
What about Purpose Built Student Accommodation?
In respect of PBSA, the exemption for members of an approved Code is welcomed and recognises that these properties are designed just for students and that the prospect of graduates having the option of an indefinite tenancy is not tenable.
Detailed work will be needed to ensure the exemption from tenure reform for members of an approved Code will be workable for students and providers, and Unipol will work with the Government on this point. Issues such as changes in membership and transitional arrangements will need to be resolved.
And the Rest of the Bill?
More detail will follow on the other provisions in the Bill in due course.
What Next?
Unipol has concerns that this Bill will reduce to supply of available and affordable housing for students, thereby reducing student choice and access to Higher Education, and is these making representations to the Government. We have written a letter to the Government today to express our concerns.
Further updates on the progress of the Bill and our representations to Government will published via the News section of the Unipol and National Codes websites.
Unipol is hosting a round table discussion to assess the details of the Bill on 27th September, free places can be booked through Unipol Training and Events here