Whilst fixed-term tenancy arrangements will remain the norm for purpose-built student accommodation, it is proposed to keep off-street properties (described in this case as a residential property that is being used to house students) inside the proposals for tenure reform. This means that students in off-street properties would have the security of tenure to remain as tenants until they gave notice, but would have the flexibility to be able to give two months’ notice throughout their tenancy. Such an approach would inevitably mean that the supply of off-street student housing would soon be out of kilter with the academic year. Many in the education sector have rightly concluded that if students were to be treated just like any other tenant then landlords on the receiving end of a notice to quit would look for replacement tenants in the wider rental market, which in turn could mean the property is not available for the start of the following letting cycle. A great deal of off-street accommodation would therefore cease to be available for students when they needed it.
In campaigning for students to be treated the same as any other tenant group, the National Union of Students accepts that the supply of student housing will be less. Chloe Field, VP for Higher Education, said “ending the use of fixed-term contracts will also enable students to settle in communities after graduating.” So, whilst fixed-term tenancy arrangements will remain the norm for purpose-built student accommodation, it is proposed to keep off-street properties (described in this case as a residential property that is being used to house students) inside the proposals for tenure reform. This means that students in off-street properties would have security of tenure to remain as tenants until they gave notice, but would have the flexibility to be able to give two months’ notice throughout their tenancy. Such an approach would inevitably mean that the supply of off-street student housing would soon be out of kilter with the academic year.
Many in the education sector have rightly concluded that if students were to be treated just like any other tenant, landlords on the receiving end of a notice to quit would look for replacement tenants in the wider rental market, which in turn could mean the property is not available for the start of the following letting cycle. A great deal of off-street accommodation would therefore cease to be available for students when they needed it. So, they accept that housing will move from students to longer-term residents.
Representations had been made, well in advance of the Bill, by the educational sector, to treat students as a special case. These emphasised that, for many students, security of tenure is a great deal less important than the availability of suitable accommodation at times that are in line with the academic year. The sector’s fear of losing supply is set against a background of encroachments from other rental markets which is already seeing a decline in the availability of off-street accommodation for students.
In the first instance, the government stuck to its position that students living in off-street properties warranted no special considerations. The government’s stated view was that, to give one group separate treatment would result in
Creating an imbalance in regulation between private rented properties let to different types of tenants [that] could also lead to an unintended incentive for landlords to let to students instead of families or other groups.
Educational sector bodies, Unipol and the NRLA (National Residential Landlords Association) found common ground to press home the importance of maintaining the fixed cycle of letting that underpins student off-street housing supply. That unity spanned very different interest groups. The educational sector saw the supply issue as primarily affecting academic access and the affordability of accommodation. For the educational sector supply and rent levels are much more important than any short-term benefits students may see from having more flexible contracts. The landlord interest groups, unsurprisingly, saw this as a business issue. The new tenure proposals would make renting to students in off-street housing even more complicated than it already is and for some the proposals could mean that letting to students is no longer commercially or administratively viable.
In examining the Bill the Levelling Up, Housing and Communities Committee also expressed concerns and it concluded that
abolishing fixed-term contracts here could make letting to students considerably less attractive to private landlords, as the student market mirrors the academic year and benefits greatly from 12-month fixed tenancies.
The Committee recommended the retention of fixed-term contracts in the student private rented sector.
In reaching this view the Committee saw this matter very much as an educational issue. Its Chair, Clive Betts explained at a Committee hearing on 10th October 2023:
The last thing we want to do is to have a negative impact on them (student landlords) because they are a very important part of the (educational) offer.
The government shifts its position
At the Second Reading stage of the Bill later in October 2023 the Government admitted
We understand the cyclical model is critical for landlords’ business models and ensures a timely and robust supply of student accommodation. We will therefore introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies. This will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year.
In many quarters there was a sigh of relief because it appeared that the needs of students and their landlords were being acknowledged at last. However, when it came to the Bill Committee in November 2023, as the details making up this new objective were announced, it became clear that this new approach creates more problems than it is likely to solve. Over that month there had also been a change of minister responsible for the Bill as Lea Rowley replaced Rachel Maclean (becoming the 16th housing minister since the Conservative party came into power in 2010).
So what is wrong with this approach?
Firstly, it only deals with one facet of student lettings becoming out of sync with the academic cycle. The focus remains on students who are good tenants not being evicted prematurely without reason, and landlords being able to regain possession in time for the start of the following academic year. The latest proposals do not address the problem of how landlords retain students for an academic year if the students do not want to stay that long. Faced with a void, landlords have to consider other tenant sectors. The needs of those tenants may not coincide with the academic cycle and so the property may be lost from the student sector for good.
The main problem as far as this blog is concerned is that students will need to be joint tenants before they are treated any differently from tenants in other sectors. It is worth taking a step back to look at what joint tenancies are and how they actually work.
Generally, the tenants of a joint tenancy are treated not so much as individuals but as a single indivisible body. Effectively, there is one tenant – it just happens to comprise several individuals. All those individuals have equal rights and responsibilities for the tenancy. They can be held liable for the tenant’s obligations as a group, or any one or more of them can be held individually (severally) liable for some or all of the tenant’s obligations. Joint and several liability is good news for landlords because it means they spread their risk for the whole property among all the individuals entitled to occupy it – and their guarantors, where applicable. If one of the group leaves or does not pay their share, the others remain liable to pay the rent for the whole property.
Joint tenancies, or any other contract making occupiers jointly and severally liable, are bad news for students because they legally link together individuals who may (at the time of agreeing on a rental) only have a passing acquaintance of each other. Many students committing to sharing a house may have only known each other for a few weeks, and yet under a joint tenancy (or a contract with joint and several liability) those students are effectively taking on financial risks from the others in their group.
The history of joint contracts in student accommodation is probably based on accident as much as design – partly as a result of legislation (the Rent Act 1977) that made residential letting less attractive for landlords.
To try and escape the extensive security of tenure and rent regulation of the Rent Act 1977, many landlords started to grant “licences to occupy”, which at that time were virtually unregulated. Student Houses in Multiple Occupation (HMOs) were particularly prone to this dodge, because landlords argued that because the students were sharing a house, none of them had exclusive possession – and exclusive possession is a core feature of any tenancy.
Residential occupiers fought back, and there was a spate of court cases on whether a letting was a protected tenancy and subject to rent restrictions, or a mere personal licence without protection for the occupants. In 1985 the case of Street v Mountford went all the way to the highest appeal court in the land. The House of Lords (now the Supreme Court) ruled that occupants had to be either licensees (such as lodgers sharing facilities with a householder) or tenants. One of the ways in which a tenancy could be differentiated from a licence was to see whether – despite what the contract said – the occupiers were able to decide who could come into the property they occupied at any given time. The “property” might only be a couple of rooms, or it might be a whole house or flat. What mattered was whether or not the occupier could decide whom and when to admit and whom and when to exclude.
Most student houses did not have a resident owner, or an owner who came into the property at will to provide services. As a result, students in a shared house or flat, who had rented the property as a group, were considered to have the status of tenants after Street v Mountford. Until that judgement many, possibly most, shared student houses were let on individual licences.
The judgement of Street v Mountford in turn had an impact on whether or not shared student housing would come within the definition of a house in multiple occupation (HMO) under the Housing Act 1985: “a house which is occupied by persons who do not form a single household”. Note that the definition is not tenure-specific: it is the fact of occupation that matters. However, the coincidence in timing of the Housing Act 1985 and the Street v Mountford decision almost inevitably led to some overlap between tenure and multiple occupation.
Realising that, post-Street v Mountford, licensing of houses and flats to groups of students was no longer a guaranteed way of avoiding regulation, some landlords figured that if they had to grant tenancies they should grant joint tenancies. They claimed that a tenancy based on a joint contract implied a single household and therefore the new amenity and management standards applicable to HMOs would not apply to students occupying a house or flat on a joint tenancy.
This interpretation of the law was tested in Sheffield v Barnes in 1995 when Sheffield City Council sought to show that joint contracts were being used merely in order to avoid their HMO standards. The judgement sought to define what a shared house was and set a number of tests including whether:
- the residents arrived as a single group or were independently recruited by the landlord.
- the occupants were responsible for the whole house or just their particular rooms.
- residents could and did lock their room doors.
- who was responsibility for filling vacancies.
It was observed that it was in the nature of the student lifestyle that they would not necessarily go out or eat together as a traditional family would: but that was no barrier to students being a single household if other unifying features were present.
Using the tests set out in the judgement most shared off-street student properties would be occupied by a single household – and therefore be outside the scope of the HMO regulations at that time. On that basis, letting to students on joint tenancies in off-street properties became commonplace after 1985. The tests established under Sheffield v Barnes for ascertaining whether a house was in multiple occupancy became redundant when a more detailed definition of an HMO was introduced by the 2004 Housing Act.
Just to underline my point: at no stage were joint contracts ever part of any legislation or legislative intent. They became prevalent in the off-street student rented sector because landlords wanted either to circumvent completely the risks and obligations associated with residential letting, or they were trying to mitigate the increasing burdens of regulation. The Renters (Reform) Bill will be the first time that any government has sought to compel students sharing a home to be joint tenants.
