Why are student lets in the Renters (Reform) Bill proposals so controversial?
The Renters (Reform) Bill proposes moving private student lets onto the system of periodic, Assured Tenancies. Here's why that's causing debate.
The Renters (Reform) Bill will affect many parts of the private rental sector - student lets included. Student properties can be either private rented properties, normally shared between multiple students, or a purpose-built property, often owned by universities. The Renters (Reform) Bill proposals split out the type of tenancy used for each - and it's causing some concern in the industry.
Under the Renters (Reform) Bill, most tenancies will shift to Assured Tenancies, or periodic, rolling contracts. Tenants will be able to give two months' notice to move out - and landlords would need a specific reason to ask them to leave, as section 21 "no fault" evictions will no longer be allowed.
The only exceptions to the tenancy reforms are purpose-built student accommodation, temporary accommodation, and supported housing. That means that privately rented student properties will move to the new periodic system of tenancies.
So, why is this so controversial for the student market?
The seasonality of student demand
Student rentals follow a traditional seasonality, yet students are locking in properties for the following year earlier and earlier in the face of increasing costs and low availability. Some start looking for their next property as early as October.
January through to March is normally the peak of that early wave of demand - and by July - two months before the start of most courses - students that haven't secured a property will probably be panicking about finding one.
The expected impact of introducing rolling tenancies
Periodic tenancies are likely to disrupt this pattern. The National Union of Students highlights that the use of rolling contracts will "enable students to settle in communities after graduating." The union is therefore asking the government to avoid "watering down" the new regulations for students.
However, with students able to give two months' notice for when they move out, there will be no guarantee that students looking for properties will find space for the start of their academic year. Plus, those that want to start looking early may not find any properties available to rent before that two month notice period kicks in.
For landlords, if their tenants leave in the middle of the year, it could be difficult to find someone to replace them. Students will also often sign a 12-month contract in the current system. Once their tenancies become periodic, this could mean longer void periods over the summer months for landlords.
The Reforming the Private Rented Sector House of Commons Committee report suggests that this could cause landlords to choose to rent their properties to professionals instead, further limiting options for students.
The impact in Scotland
In Scotland, most tenancies became open ended under the Private Housing (Tenancies) (Scotland) Act 2016 - including for private student lets.
The Scottish Purpose-built student accommodation (PBSA) and student housing report shares that it's "widely accepted" that this change has encouraged private landlords to move away from student lets, looking for more long-term tenants in other markets.
The report points to Glasgow as an example city where this has pushed up rents for properties that stay in the sector.
Will the government change its mind on student lets?
Housing Secretary Michael Gove has, reportedly, already recognised that this is contentious. The Telegraph has shared that the government may amend the bill to "allow landlords to guarantee vacant possession" for the next batch of students, helping them "stick to their yearly let business model."
Chris Norris, of The National Residential Landlords Association, says: “Our recommendation is that the Government add a possession ground that, subject to the tenancy qualifying as a student tenancy, could be used by landlords to bring a periodic tenancy to an end in line with a point in the academic year."
This change would need a clearer definition of a student tenancy and the notice that landlords can give. The government has said that it will “continue to engage with students and landlords on these measures to ensure they are working for both parties.”
As the bill passes through the Houses of Commons and Lords before receiving royal assent, the industry will need to wait and see if this amendment will be included in the final version of the legislation.