The Impact of the Renters’ Rights Bill on the Student Rental Market: Challenges and Potential Solutions

Given that the University of Portsmouth is almost wholly reliant on the local private rental sector for student accommodation in years 2 and beyond and knowing that Scots Universities were turning people away last year due to lack of accommodation after rental regulation changes, the introduction of the Renters' Rights Bill in the UK has sparked concerns, particularly for student landlords. This is highlighted in the discussion between 2 landlords and 2 letting agents summarised here. Their dialogue reflects the uncertainty and potential disruption that the bill might bring to the student housing market, especially concerning the removal of Section 21, Ground 4A provisions, and issues around fixed-term tenancies. This article examines several of these issues and proposes potential solutions to address them, focusing on how the bill might affect landlords and students in the private rented sector (PRS).

Key Concerns: The Commencement Date and Fixed-Term Tenancies

Andrew, a Midlands based landlord and property professional, raised a significant issue regarding the commencement date of the Renters Reform Bill. He expressed concern that if the bill's implementation occurs less than five months before the end of existing fixed-term tenancies, it could cause chaos in the student rental market with landlords unable to ensure the properties are vacant in time for the next group of students. The requirement for landlords to provide one month's notice before serving Ground 4A and then giving a four-month eviction notice could extend beyond the new intake who have signed up for a new tenancy. Andrew suggests that delaying the bill's implementation in the student market until October 2025 could prevent this potential disruption.

Sarah, a Portsmouth property letting professional responded by offering a practical workaround. She suggested that landlords could issue Section 21 notices before the bill's commencement, which would remain valid thereafter, allowing them to cover the existing group in the event of lingering tenants over the summer. However, she acknowledged that timing would be key as one needs to bear in mind that the expiry date of the notice must be after the last day of the fixed term and notices are only valid for six months from the date of issue. There will be a short time frame (perhaps three months) after the commencement date in which section 21s can be progressed to court so clear understanding of these rules will be essential.

The key concern here is timing. If landlords cannot serve notices in alignment with the end of fixed-term contracts, they risk either failing to regain possession of their properties in time for new tenants, who have likely already signed a tenancy agreement, or violating the terms of the bill. Sarah also highlighted the potential confusion around the requirement to notify tenants of possible grounds for eviction within 28 days of the commencement date (such as Ground 4A) to be able to rely on such grounds, which is not a notice period as such but could further complicate matters for existing tenancies. 

The Contradiction in Ground 4A: HMO and Non-HMO Properties

Andrew raised concerns regarding the student ground only applying to HMO student accommodation and the ambiguity in the Renters' Rights Bill regarding Ground 4A. The bill specifies that this ground can only be applied to Houses in Multiple Occupation (3+ people), but the wording of the following sentence on page 213

"But, in a case where two or more persons are or would be, or were, the tenant, the tenant does not, or did not, meet the student test unless all of those persons meet, or met, that test."

also suggests that it could apply to smaller student properties with just two tenants. This has led to confusion among landlords regarding whether Ground 4A can be applied to non-HMO student properties, potentially broadening its scope.

Sarah offered an interpretation that the above was pertaining to those tenants on a joint tenancy and not particularly relevant to the requirement of being an HMO or not. What is important is that the legislation, as it stands, does not allow for the student ground to be used where a dwelling is let to only one or two students - whether they are on a joint contract or individual tenancy. In all circumstances, if the tenants are on individual tenancies, the ground can only be issued to individual tenants in the house that meets the student test described in the bill. In the case of those on a joint contract, every single one of the tenants named on that contract must pass the student test for the ground to be used at all. This interpretation aligns with the bill's broader intent, but she acknowledged that the inclusion of the HMO-specific language may have caused unnecessary confusion and that the above wording should be amended to ensure it is better understood. 

The Removal of Section 21: Implication for Notices and Student Tenancies

Local landlord, Martin raised an important question about the transition from the current system, which allows landlords to serve Section 21 notices, to the new regime where Section 21 is abolished. He wondered whether a Section 21 notice served before the bill's enactment would still be valid after the bill becomes law. This is a critical issue for landlords who rely on the certainty that Section 21 provides, particularly in the context of fixed-term student tenancies.

Alwin, a Portsmouth Letting Agent and Landlord responded by suggesting that any Section 21 notices served before the bill's commencement would likely remain valid, provided they were served before the official start date. However, he pointed out that the abolition of Section 21 poses a broader challenge for student landlords moving forward. The viability of student lets may decrease, as landlords will lose the flexibility to regain possession at the end of academic years.

Alwin also highlighted the risks associated with joint and several tenancies, where one tenant's notice can end the tenancy for all occupants. This could lead to fragmented student groups and administrative difficulties for landlords, who would either have to renegotiate terms with remaining tenants or risk losing the academic ground for eviction. 

Potential Solutions to Minimise Chaos in the Student Market

1. Staggered Implementation of the Renters Reform Bill: A delayed implementation date for the student market, as Andrew suggested, would give landlords and students time to adjust. Implementing the new rules from October 2025 would ensure that fixed-term tenancies for the current academic year are not disrupted by the transition.

2. Clarification of Ground 4A Provisions: The government should provide clearer guidance on the application of Ground 4A, particularly for non-HMO properties. A clearer distinction between HMOs and joint tenancies would help landlords understand their rights and obligations under the new rules.

3. Transitional Protections for Existing Tenancies: To address concerns about the abolition of Section 21, transitional protections could be introduced for existing tenancies. This would allow landlords to serve notices under the current system until the new rules fully take effect, ensuring a smoother transition for both landlords and students.

4. Consideration of the Scottish Model: Sarah mentioned the example of Scotland, where new tenancy rules were applied only to new tenancies, rather than converting existing ones. This approach could provide a useful model for the UK to mitigate the impact of the new rules on current fixed-term tenancies.

5. Encouraging the Use of Individual Tenancies: While joint and several tenancies have been a popular model for student lets, the new regime may encourage landlords to move toward individual tenancies. Although messier to manage, individual tenancies offer more flexibility in dealing with tenants who leave mid-term and may reduce the risk of group tenancies collapsing due to one tenant's departure. However, this approach would also have cost implications as the energy bills would need to be included in the rent and paid by the landlord inevitably resulting in an increase of energy use.

6. Lobbying for Student-Specific Amendments: Finally, as Andrew mentioned, it is important for landlords to continue lobbying for amendments that cater to the unique needs of the student rental market. Ensuring that the new rules reflect the realities of student housing, such as fixed-term contracts aligned with academic years, will help to minimise disruption and maintain the viability of student lets. 

Conclusion

The Renters' Rights Bill presents both challenges and opportunities for landlords, particularly in the student rental market. While the abolition of Section 21 and the introduction of new grounds for eviction could cause chaos if not managed properly, there are potential solutions to mitigate these issues. By delaying the bill's implementation for student tenancies, clarifying Ground 4A provisions, and providing transitional protections, the government can help ensure a smoother transition. Furthermore, ongoing dialogue between landlords and policymakers will be crucial to shaping the final form of the legislation and minimising its negative impact on the student housing sector.