Housing experts and landlords are warning the government that the Renters Reform Bill could damage the private student sector with students losing out with higher rents and less choice. Should private landlords leave the sector they warn that the current shortage of student accommodation will only worsen.
The Bill will scrap fixed term tenancies and move all tenancies to periodic tenancies. With the scrapping of fixed term tenancies, student landlords will not be able to guarantee spaces to new students at the start of the next academic year and students will be able to vacate accommodation at any time during the academic year if they give the correct notice. It is feared that these major changes could deter many current student landlords from continuing to let to students.
Private landlords also highlight the anomaly that the Purpose Built Student Accommodation (PBSA) sector, who rent to the same students as private landlords, have been favoured with an exemption from the scrapping of fixed term tenancies.
Currently, students are offered a range of housing options, including PBSA provided by universities and the private sector, or shared housing options in HMOs provided by private student landlords. All are seen as vital in providing choice and affordable student accommodation options.
Some cities are already experiencing an undersupply of affordable student accommodation as student intake has increased since the pandemic. The loss of any existing student landlords will only increase the shortage.
According to data from Accommodation For Students (AfS), a leading students lettings website, HMOs are currently marketed at an average of £22 per week less than PBSA, and where a student chooses to manage their own bills, this difference increases to £30.15 per week. The average price of an HMO is currently £122 per week, or £113.85 without bills compared to the average price of a PBSA is £144 per week.
In certain cities the difference between a private letting and the PBSA is considerable. In Bristol, the average price difference between HMO and PBSA is £76 per week, in York it is £43.53 and in Edinburgh the difference is £37 per week.
Scottish system failing students
Experts highlight evidence from a review in Scotland, where similar provisions have already been introduced, which shows that the student sector will suffer.
Martin Blakey from Unipol, a student housing charity, says “The conclusion of that research is that many landlords in Scotland have moved out of student housing in HMOs. The recommendation is that the Scottish parliament should revisit that, because it’s having a serious effect.”
Simon Thompson of AfS states ““We have seen the impact of a similar change in the law in Scotland already, with students struggling to find suitable accommodation in cities like Glasgow. It is, in my view, vital that an exemption is made for student landlords; if it is not, a significant number of students will struggle to find affordable accommodation in the future.”
Wrong for the student sector
There is broad agreement among experts that private student landlords should be exempted from the scrapping of fixed term tenancies.
Simon Thompson says “It is, in my view, vital that the Government exempts private student landlords from its proposal to move all tenancies to periodic ones, as it has for institutional landlords who run PBSA. Failing to do so will force private landlords out of the market, reducing the mix of affordable options and driving up rents for student who are already on a limited budget.”
“Furthermore, where demand exceeds supply, students will be forced to look for accommodation further away from their university town or campus, meaning transport then becomes an additional cost and problem for students.”
Martin Blakey says “We don’t think it will work for the student sector, it’s as simple as that. It’s an academic cycle, so if landlords are not certain they can re-let for the following year, that accommodation will be very difficult to let. In certain parts of the country where you have very tight housing supply, that will have quite a dramatic effect.”
“The people at the sharp end of this will be Bristol, Brighton, York, Nottingham, where any contraction in supply will be problematic – and it’s problematic now. Students are already finding it difficult to rent.”
Leading housing solicitor, David Smith of JMW Solicitors, says that the new legislation works against the interests of students “It has long been an article of faith for student groups that students should not have lesser tenancy rights than everyone else. That is understandable and for some students will be important. But it hardly reflects the position of the majority of students.”
“Landlords will not be able to have confidence that students will leave and that they will be able to go ahead with new tenancies. Therefore, they are likely to not execute tenancies and leave them in abeyance until they can be sure that they will get possession. This will substantially disadvantage students who will potentially lose properties at the last minute with little opportunity to find an alternative.”
Ben Beadle, chief executive of the National Residential Landlords Association (NRLA), also condemns the proposed ban on fixed-term contracts for student HMO’s and explains “It just doesn’t work for landlords and it doesn’t work for renters because you are going to have no certainty that property will be available when people need it.”
“At the moment students start looking in January or February, you secure it, you sign up, you know you are moving in July, August or September, and that property is ready for you.”