Renters Reform Bill: landlords brace for student contract chaos

7th June 2023

The Renters Reform Bill, recently published by the Government (you can read the full text of the Bill here and the Government’s press release here), proposes significant changes that will have a profound impact on landlords, particularly in the student rental market. Currently, students and landlords alike enjoy the security of fixed-term tenancy agreements (FTTAs) that provide stability for the duration of their academic year. However, under the proposed bill, FTTAs would be banned, placing all rental properties, including student houses, on periodic (open-ended) contracts. While this change appears to offer greater flexibility for students, it presents challenges for landlords and jeopardizes housing stability, ultimately outweighing any benefit to students at the height of a renting crisis.

With the removal of FTTAs, landlords may experience increased renting voids over the summer months, as students exercise their two-month notice period. This could push landlords to consider alternative options such as renting to professionals or turning to platforms like Airbnb, which could further diminish the availability of student rental properties.  On the other hand, some Landlords may decide to increase rents to protect the possibility of summer void periods, thus achieving the same rent over a shorter tenancy and therefore less wear on the property while it’s empty. Another possible outcome of the proposal is the increased financial burden on landlords for the additional administrative burden of finding new tenants, leaving landlords little choice but to stay and pay the price, or exit the market completely. This will deter landlords from renting to students, leading to a contraction in the student housing market and heightened competition for available properties. A possible solution to this is the implementation of standardized tenancy agreements tailored to student rentals. These agreements would incorporate specific provisions and terms commonly applicable to student tenancies, reducing the need for extensive negotiation and associated costs. Likewise, extensive guidance and accessible resources would be provided to help landlords and agents alike to navigate the transition to open-ended tenancies. StuRents’ co-founder Tom Walker, also takes a different approach from the ‘doom and gloom’ and states:

“A change like this would represent a huge shift from the status quo but could serve property managers well; a more evenly distributed house-hunting season is easier to resource and less chaotic.”

However, the Scottish experience provides a cautionary tale. When Scotland implemented similar reforms, private landlords shifted away from the student market, seeking long-term tenants to avoid void periods. This resulted in a reduction in the supply of student housing and increased rents. Homelessness rates among students also surged, with many facing difficulties finding adequate housing. These repercussions highlight the potential consequences of banning FTTAs for students and present a comparable future of the student PRSThe National Union of Students (NUS) has shown overall support for the proposed reforms despite concerns about potential uncertainties and shortages in the student rental sector. The NUS argues against exempting students from the new reforms, stating that such an exemption would create an inequitable situation, where students become a marginalized group of tenants devoid of the same protections afforded to other renters.

While the Renters (Reform) Bill aims to improve rental standards, aligning the rights of student renters with those of non-students, it must consider the unique circumstances of student life. Students operate on a yearly cycle, and FTTAs have offered them stability and the ability to rent with friends. The proposed changes may force students into a fragmented living arrangement, with individuals competing for rooms in houses, potentially leading to more stress and mental health challenges. Additionally, Purpose-Built Student Accommodation (PBSA), registered with the government, will still be able to utilize FTTAs, but these accommodations are often more expensive than student HMO’s, widening the affordability gap further. As the NUS sits on the boards of HEFCE, the Office of the Independent Adjudicator (OFFA) and UCAS, their support to the amended Bill is significant and begs the question as to whether their alliance is well informed and in tune with the volatility of the market.

So how will Coapt adapt to these changes if the bill is to be implemented into legislation? Since the publication of the Renters Reform Bill in mid-2022, we have been diligently following developments. Our dedicated team has been actively studying the provisions outlined in the Renters Reform Bill, analysing their potential effects on landlords, and developing strategies to mitigate any potential challenges that my arise in the future should the bill be implemented.

We understand the importance of keeping landlords informed and empowered, enabling them to make informed decisions and adapt their rental practices in accordance with the new legislation. Contact the business development team today and find out how your property portfolio can be protected.