The long-awaited renters reform bill was finally published this month with much discussion of the extension of the Decent Homes Standard to the Private Rental Sector, the banning of Section 21 'No fault' evictions and the much needed tightening of rules for social housing landlords.The content of the bill will change as it makes its way through the Parliamentary process, but the wording relating to the removal of Section 21 and related items will cause chaos in the student rental market unless it is radically changed. In its current form, landlords will not be able to let for a fixed period, so come February when normally students choose their accommodation for the next year, landlords will have no certainty that current tenants will leave when the summer term ends and as a result, will not be able to advertise their properties.
The government argues that currently tenants face a system which mixes fixed-term tenancies with periodic tenancies and the world would be better for tenants if we only had periodic tenancies.
"The most common form of tenancy in the PRS is an Assured Shorthold Tenancy (AST). The current tenancy system mixes fixed-term tenancies with periodic tenancies. While this appears to offer choice, these complexities can be difficult to understand, and tenants do not always have the power to negotiate their preference at the outset. Both types of contracts are described in Figure 4.
Figure 4: tenancy types in the Private Rented Sector
Fixed terms commit both landlord and tenant for an agreed period, typically 6 or 12 months.
During a fixed term, landlords cannot use Section 21 to evict a tenant, though they can use other grounds for possession.
Tenants can only leave during a fixed term with the landlord's agreement, and they must pay rent for the duration, unless agreed otherwise. At the end of a fixed term, tenancies do not automatically end – instead becoming periodic unless a new fixed term is agreed, or notice is served.
Periodic tenancies are weekly or monthly tenancies that do not last for a fixed period. They offer more flexibility to tenants and landlords.
If a tenant wants to leave the property, they are liable for the rent until the required notice period has expired. This is typically one month but can vary.
A landlord can end a periodic tenancy with two months' notice by using a Section 21 eviction notice or by using other grounds for possession.
Locking parties into a contract undermines the flexibility that the Private Rented Sector offers and restricts tenants' and landlords' ability to react to changing personal circumstances. Similarly, it is wrong that tenants feel unable to challenge poor standards in their home because they worry that their landlord will use Section 21 to evict them, rather than deal with their complaints. In 2018, Citizens Advice found that tenants receiving a Section 21 notice were five times more likely to have recently made a complaint to their council compared to those who had not."
This all makes a great deal of sense for the non-student tenant – but a student happily signs a licence for a fixed period, often 48 or 50 weeks for student halls (purpose built student accommodation normally referred to as PBSAs) and needs to be able to do the same when choosing a home for a year living in the community.
If the only option is a periodic tenancy, a small percentage of students will benefit if they drop out as they will be able to give 1 months notice but the vast majority will find it much, much harder to find accommodation as it will not become available until the summer break, it will be much harder to find a home for a group of friends as previous occupants will have a right to stay meaning more houses of mixed groups (always the ones where problems occur), and rent levels will be much higher as there will be fewer landlords willing to take the financial risk or the much higher costs involved associated with longer void periods and less certainty, even if mortgage companies allow student lets in properties they finance.
Andrew Simpson, Chair of the York Residential Landlords Association clearly stated the concerns of many when he said:
"60-70% of our members operate in the student market and I would imagine the figure is circa 20/25% nationally. Whilst I think the proposals will improve some PRS sub-markets, there is a distinct lack of understanding when it comes to the student market and as a result there will be a multitude of unintended consequences. Whilst I appreciate that this is not the bill, it is heading for chaos in its current format. You will be aware of these issues but here are my thoughts:
Richard Thomas, a Portsmouth student landlord based in Chichester wrote to his local MP, Gillian Keegan, saying:
"Dear Mrs Keegan
I am writing to raise serious concerns over the proposed white paper on rent reforms.
I have had two student lets in Southsea for the last twenty years and this has proved a very satisfactory arrangement for us and our tenants.
Along the way a past government moved the goal posts on capital gains making the option of selling unattractive.
However, this is nothing compared to the problems anticipated with the proposed changes.
The student rental market operates on the premise that students and landlords are guaranteed at least 6 months tenancy and generally a ten month fixed term. Without this, and with the likelihood of students dropping out of courses, the proposed model does not work for private landlords.
The government has recognised this with purpose built student accommodation but appears set to ignore private landlords who have been working hard to provide student accommodation for many years.
I would be grateful to receive your comments and ideally representation in parliament when this matter comes up for discussion.
Thousands of landlords in the student market will be in the same position.
All the best, Richard"
We have proposals which would definitely help and there will be an article outlining how we can avoid some of these issues in next months news - but we do need local students and Universities to understand the problem, as we all know authorities tend not to heed landlords, even though we are the experts in this particular field. So do please help get the message across - or start moving out of the student rental sector.
Written & oral information and advice from the Portsmouth & District Private Landlord's Association is given in good faith, but no responsibility whatsoever is accepted by the Association or it's officers for the accuracy of it's information & advice nor shall the Association be held responsible for the consequences of reliance upon such information.