The looming ban on fixed-term tenancies as part of the Renters Reform Bill will cause chaos for both students and landlords in the university rental sector, experts say.
According to research by the accommodation platform StuRents, the UK will face a shortfall of around 450,000 student beds by 2025 and if landlords leave the PRS because of the ban on fixed-term tenancies, where will these students go?
An investigation by Property118 highlights the struggles student landlords will face under reforms by the government to abolish fixed-term tenancies, which in turn will have a serious knock-on effect for to students looking for accommodation.
Impossible for landlords to market their properties for the following year
Landlords are reliant on fixed-term contracts as they offer security as to the length of time a tenancy will last. However, if the government goes ahead with its ban on fixed-term tenancies, landlords will have no guarantees that students will move out at the end of the academic year. It will be impossible for landlords to market their properties for the following year, which will reduce the pool of available property, leaving thousands of students with nowhere to live.
The government’s proposals in its white paper ‘A Fairer Private Rented Sector’ argue that periodic tenancies “provide greater security for tenants while retaining the important flexibility that privately rented accommodation offers”.
However, in what seems like a contradiction in policy, purpose-built student accommodation (PBSA) providers have been exempted from this proposal and can still offer fixed-term contracts, and require possession at the end of the tenancy.
‘Two-tiered student housing market’
The NRLA argues that the PBSA exemption creates a two-tiered student housing market. A spokesperson for the organisation said: “It is equally troubling that the exemptions proposed for purpose-built student accommodation would create a two-tiered student housing market. “This will inevitably lead to more confusion and the inability for many landlords to continue to provide accommodation in the way that they currently do.”
Universities UK, which represents 140 universities across the country, argued that the government proposals could undermine the stability of the student housing market.
A spokesperson from Universities UK told Property118: “We recognise the importance of safe and accessible student accommodation in the private rental sector, as well as the impact that concerns over accommodation can have. As such, we are concerned that the government’s proposals to abolish fixed-term tenancies could undermine the stability of the student housing market, leading to a reduction in available accommodation. We have called on the government to recognise the specific needs of students in these reforms, and to consider changing some elements of the proposed law to better protect student housing.”
Student money saving website, Save The Student, said any new legalisation needs to protect renters.
Tom Allingham, the head of communications at Save the Student, told Property118, “according to our recent National Student Accommodation Survey, 50% of students are worried about the university housing shortage. With the Maintenance Loan lagging behind inflation and students facing rising accommodation costs, it’s vital that the needs of this enormous group of renters are taken into consideration when it comes to any new legislation.”
No student landlord should be lost from the sector
Ian Fletcher, director of policy (Real Estate) at the British Property Federation, said: “We were pleased that the UK Government recognised that Purpose-Built Student Accommodation should be allowed to continue issuing fixed-term tenancies in its Fairer Renting White Paper.
“Many smaller landlords though, also operate their properties based on serving the student market and should also have that ability to issue fixed-term tenancies.”
Mr Fletcher added that, "no student landlord should be lost from the sector. The recent report of the Levelling-Up, Housing and Communities Select Committee makes the sensible suggestion that this should be contingent on signing up to a code of practice. We support such an approach. Many rental markets are very tight at present, and for the sake of students, it is important no student landlord is lost from the sector. Hopefully, the Government is listening and will amend its White Paper stance when it publishes its Renters’ Reform Bill later in the year.”
Two in three students struggling to pay rent
In their first year, many UK undergraduates tend to rent a room from student halls before moving straight into the private sector for their second and third years. Many students choose to rent via the PRS as it is the cheapest option. According to data from Save the Student, renting from a private landlord costs an average monthly rent of £523, compared with £596 in university halls. The survey revealed nearly two in three student tenants in the UK are struggling to pay rent, and two in five say that they have considered dropping out of university due to high rents.
Students at University of Glasgow denied accommodation
In Scotland in 2017, the government introduced the Private Residential Tenancy (PRT), which reduced the number of homes available to students as landlords were no longer able to offer fixed-term leases which matched term times. This has created havoc across the student housing market in Scotland. In August 2022, the University of Glasgow denied accommodation to students who live within commuting distance. Prospective students from across the UK were also told they were no longer guaranteed a place to stay. The university blamed the shortage of private accommodation on changes to private rental tenancy law, as well as private landlords affected by Covid restrictions removing properties from the market.
John Blackwood, the chief executive of the Scottish Association of Landlords (SAL), said, “as far back as 2015, SAL warned changes to the private rented sector would adversely affect students and action was needed to ‘prevent a sharp reduction in the amount of student accommodation available. Sadly, these warnings were not heeded at the time and what we predicted would happen has become reality. Subsequent decisions by the Scottish government around rent freezes and eviction bans have only made the situation worse by reducing the supply of accommodation in the PRS.”
Landlords may decide not to rent to students
The association warned members of the Scottish Parliament (MSPs) on the Infrastructure and Capital Investment Committee back in 2014 that, “many landlords split their properties between students and holiday lets, particularly in places like Edinburgh. Instead of providing housing to these two groups during the year, landlords may decide not to rent to students as they wouldn’t be able to guarantee that they would leave the property at the end of the academic year in time for visitors to the city. Instead, they will take more traditional, longer-term tenants, reducing the supply available for students and visitors.”
Mr Blackwood added, “the Scottish government must sit down with all parts of the housing sector including social landlords, private landlords and build-to-buy, and come up with a long-term plan which encourages investment in all housing types which will help solve Scotland’s ongoing housing crisis.”
A spokesperson from the Russell Group which represents 24 members of public research universities in the UK, told Property118, “the University of Glasgow is working with the City Council, Scottish government and others to try and find longer term solutions to housing market pressures, securing more than 800 extra places for this academic year and a further 1,400 additional spaces planned at a total cost of £49m. We are seeing increasing pressures on student accommodation that reflect the challenges facing the housing market as a whole in the UK, where new housing demand is outstripping supply. The situation in many university cities has been exacerbated in recent years by issues like a decrease in building of new purpose-built student accommodation (PBSA), a contracting private rental sector, alongside strong growth in student numbers.”
Private student landlords serve an important role in the delivery of student accommodation across the country. It serves as an affordable alternative compared to PBSA but with many student landlords set to leave the sector, many students will be left with nowhere to live – which isn’t part of the ‘university experience’ they were undoubtedly hoping for.