Oh, the grand old Duke of York
He had ten thousand men
He marched them up to the top of the hill
And he marched them down again
The Renters Reform Bill was part way through the House of Lords when the General Election was announced on 22nd May 2024 and will not now proceed to the statute book. The banning of “no fault” evictions (known as Section 21) was first raised in the Conservative Party Election Manifesto of 2019. But the Bill had a troubled birth, only being laid in Parliament in May 2023, followed by ructions within the Conservative Party and the introduction of several significant amendments in the Commons just before it proceeded to the Lords, where many other amendments were waiting. Fundamental disagreements about aspects of the Bill meant that it could not be nodded through the traditional pre-election parliamentary “wash-up” process.
Student housing featured prominently in consideration of the Bill, so now is a timely moment to consider how things stood as the Bill fell and how things might be approached for students as any incoming Government picks up the challenge of improving renters’ housing rights. Some kind of new Bill will be back and, looking at the student housing market, it would be good to get the basic approach right.
HEPI has continued to take a close interest in this Bill with four Blogs covering its impact and implications (Renters Reform Bill and the impact on higher education by Rose Stephenson, How the Renters Reform Bill can deliver for all tenants – including students by Calum MacInnes and Students and the Renters Reform Bill: the government has listened but it needs to listen some more, parts I and II by Martin Blakey).
The main concentration of attention within the student housing market was focussed on the initial proposal to treat students the same as any other private sector tenants. As Rose Stephenson wrote back in May 2023:
Aiming to give students the same rental rights as non-students is also a noble endeavour. However, many students lead different lives to professional or family renters. They rent on a yearly cycle because student lives are often compartmentalised into 12-month blocks. There are advantages to providing greater flexibility to student renters, but also significant pitfalls which should not be overlooked.
Concern about this was raised by the House of Commons Levelling Up, Housing and Communities Committee and the Government decided that “purpose-built student accommodation (PBSA) would be exempt from these proposed changes to tenure as long as the provider was registered for government-approved codes.” This removed around 681,000 student tenants from tenure reform.
This left the reforms as only being applicable to students living in off-street properties (shared houses) around 551,000 students.
After a considerable amount of lobbying by both educational sector bodies and landlords, the Government responded that it:
…recognises that the student market is cyclical – and that removing section 21 will mean landlords cannot guarantee possession each year for a new set of tenants.
Having engaged across the sector, 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.
At the end of the Bill’s life, what effect would it have had on students?
Exempting purpose-built student accommodation (PBSA) was to be achieved by amending the 1988 Housing Act which would have taken all PBSA properties that were members of an approved Code out from all the Renters Reform provisions. It would also have ended the use of Assured Shorthold Tenancies for private sector PBSA, and these would have been replaced by common law fixed-term tenancies. Although this meant that there would be no statutory protection of tenure, as the Government pointed out, these tenancies continued to fall under the Protection of Eviction Act 1977, which (in general) makes it a criminal offence to deprive a residential occupier of their occupation without due process of law (normally a Court Order).
The situation for students living in off-street houses was quite different. Here, there would be no fixed-term contracts, and students would be free to give two months’ notice to leave their tenancy. However, to ensure landlords could let their properties on a normal academic cycle, the landlord would be given rights to repossess the property (so long as they gave notice at the commencement of the tenancy that they intended to do this). In the words of the Government, repossession would be mandatory for a property “… occupied by full time students and (where) the landlord intends to relet the property to new students in line with the academic year.” There was talk of this repossession being limited to between June and September but this raised objections that not all students were undergraduates on that particular academic cycle: this timing issue was never clarified before the Bill fell.
Initially, this new right of repossession was restricted to houses in multiple occupation, but was later extended to any house which housed only students. The proposal that this right would also only extend to houses let on joint contacts was dropped as quietly as it had been proposed.
During the passage of the Bill, amendments were made and accepted where a tenant could not give notice to leave a tenancy within the first six months. This would have meant that the right to give two months’ notice could only be acted upon after month four, to take effect at month six. This still meant, however, that students would be able to give notice to leave their properties after the first six months.
The other proposals in the Bill included:
- the right to keep pets
- the setting up of a Landlord Portal
- rights of redress and
- a Decent Homes Standard
These would all have applied to students renting off-street houses but all these areas were subject to further clarification and regulation that would have taken place after the Bill had become an Act.
A few of the Bill’s initial proposals also fell by the wayside: regulating rent payment periods disappeared, as did the idea of a deposit transfer scheme that would enable tenants to move deposits between one landlord and another without having to find two deposits.
The Bill’s Effects on Students and Landlords
Purpose Build
The exemption from the Bill of purpose-built student accommodation, where this was signed up to one of the Government-approved Codes, meant that there would have been no change for those student tenants.
Not all PBSA falls under the Codes and it is estimated that around 5% of private sector supply falls outside of the Code. Many of these providers will have made a decision not to join because they do not want (or are unable) to comply with the standards set. In some cases attempts at membership will have failed or providers have been expelled from the Code because of non-compliance.
Under the Bill’s provisions, non-Code suppliers would have found themselves at a considerable disadvantage in the market, operating as if they were off-street properties. That would have led either to some disposal of stock to Code members or attempts being made by those suppliers to join the Code and meet those standards. The need to join the Code would have presented a considerable challenge for the Code operators in ensuring that these unwilling providers really did meet the standards required. However, on balance, the incentive the Bill gave to Code providers would have resulted in improvements for some students who currently rent PBSA outside of the Code’s provisions.
With the importance of being a Code supplier highlighted, this would also have enabled the Code operators and the Government in the next review of the Codes to improve tenants’ rights through Code conditions. The majority of PBSA Code suppliers already voluntarily give their tenants additional rights, but this would have enabled this to be regularised throughout the PBSA sector.
Off-Street housing
It would have fallen under the Bill’s provisions. The uncertainty caused by discussing tenure reform over the last five years has almost certainly seen reduced investment in student off-street properties, although it is difficult to untangle this reduction from the effect of changes in the landlords’ tax regime and the disruption to the lettings market (particularly the student lettings market) caused by the Covid restrictions and online teaching.
The repossession rights proposed for landlords would probably have been effective at maintaining the existing supply of accommodation in line with the academic cycle.
The rights of student tenants to give two months’ notice, meaning that tenants could leave a property after the first six months of occupancy, would certainly be regarded as a “win” by many of today’s student tenants. But the longer-term advantage of this would have been mitigated as the market adjusted its rental and tenancy structure to ensure rental income was maintained. Those changes were likely to be:
- shortening student tenancies from the more common 48-52 weeks to 44-48 weeks but increasing rent levels to maintain the same annual income;
- students would be more likely to give notice at the end of their tenancies (many students end their exams in May to ensure they can leave at that stage rather than pay rent up to the more traditional 30th June date). Landlords had already raised the option that they could have adjusted their tenancies to run from the end of May to May of the following year. This would reduce the likelihood of a student giving notice “early” and would mean those students not wanting to rent over the summer period would have to take the risk of renting what was left in the market just before their studies commenced in September or October.
Because almost all student tenancies turnover annually, the introduction of these market changes would have been swift, and the off-street market would have been quickly reshaped.
One further drawback to landlords of shortening or reducing periods of occupancy by students is that a non-occupied property incurs Council Tax. Most local authorities, keen to maximise income in these hard times, make charges for any period when student exemptions do not apply, even if the property is left unoccupied for only a couple of days. This cost of this tax to the landlord would be factored into any future student rent level.
One reason the Government had for maintaining the right of students to give two months’ notice was “We believe retaining fixed terms would unfairly lock students into contracts, meaning they could not leave if a property is a poor quality, or their circumstances change. Student tenants should have the same flexibility as others.” This argument is a reasonable one, but only where the rented housing supply is sufficient to enable tenants to move easily or where moving house does not disrupt academic work. The restriction on leaving within the first six months of the tenancy would have meant that students who left their educational institution or failed to gain a place would still have been locked into a contract for that period.
This “right to move” would have had only a minor effect on housing standards and tenant choice, and it should be remembered that virtually all shared off-street student housing already falls under a strict licensing regime (mandatory, additional or selective) in almost all of the UK’s major cities: these houses are licensed individually as meeting a strict set of housing condition standards. If that is not the case, then beefing up licensing enforcement is much more likely to result in improved standards that limit consumer pressure in a crowded market.
Other gains are difficult to assess because the details of the proposed redress scheme (although students renting via agents already have this) and the tenant portal were far from being finalised.
A Future Tenant Rights Bill
Any future Government is bound to return to looking at reform in the rental market. In student housing, the central policy issue will be: Should students be treated differently to other tenant groups or treated the same as other privately rented tenants? In previous discussions, the “student voice” was itself very divided on this issue. The educational sector is unusual in that there are a number of what might be called “intermediate bodies” seeking to do their best for students (UUK, CUBO, ASRA, Unipol) and these all argue for students to be treated as a specific tenant group.
In the lobbying on the Renters Reform Bill those “intermediate bodies” were primarily reacting to proposals that they thought would reduce the supply of houses to students. This is an important perspective that was raised by Dr Julie Rugg at the Renters (Reform) Bill (Second sitting) Committee stage held on Tuesday 14th November 2023 when she addressed this issue:
I do have concerns about the Bill as it currently stands. We have become quite focused on the abolition of section 21, and I can understand why, but the abolition of section 21 does not deal with the reasons why a landlord might serve a section 21 notice. My feeling is that, if the Bill goes through as it stands, it will give tenants the impression that they have greater security than they in fact have.
One of the biggest concerns with the Bill as it stands relates to possession on the ground of the landlord selling the property. The fact that the landlord is selling is one of the biggest reasons tenants are asked to leave, and a lot of landlords are exiting the market. The Bill does not prevent that, so that will continue.
We have to think about how to calm everybody down and start thinking about what the problems are in the market. One of the biggest issues in the market at the moment is the lack of supply. That is quite problematic for tenants, and it is one of the reasons there is a lot of energy around section 21. Abolishing section 21 is not going to deal with supply issues. From the evidence we have at the moment, it is very likely to make supply issues worse.
The concern in student housing was not only about overall supply but the specific reduction of student housing supply because, if students were no different to any other tenant group and could come and go as they pleased, then why would landlords rent to students and incur void periods, when they could rent to other rental groups without having empty rooms in the context of rising overall demand for renting?
Those who argue for students to be treated as any other tenants can use phrases such as students would be treated as “second class citizens” but this catchy slogan ignores the simple equation that the gains for students, if all rented tenants are to be treated the same, are outweighed by the losses. Accommodation officers will remember (before immigration control was tightened) the many international students with dependents who recently needed to enter the local housing market as “normal” tenants: the result was a lot of poor-quality decisions about renting being taken (with time being lost waiting for an affordable supply of housing that often did not exist) with many students spending their entire year’s housing budget on a few month’s short term accommodation in hotels or Airbnb.
If policymakers and the Renters Reform Coalition want to push for all renters to have the same rights, then the outcome will be a limited improvement in security of tenure for the vast majority of rented tenants, but student off-street housing would become much less attractive and would suffer “collateral damage”.
In the Renters Reform Bill discussions, arguing for students to be treated the same as all other renters seemed odd when PBSA was already exempt, and the “specialness” of student accommodation had already been accepted.
The argument that students are the same as all other private sector tenants also plays directly into the hands of those who feel that, on that basis, students should pay Council Tax. Hard-pressed local authorities with large student populations waste no time in explaining that they now get no funding for these residents and it is about time they did.
When the Government were asked to allow fixed term tenancies to remain for students, they not unreasonably responded by pointing out that if all student housing was exempt from the Act that might make the student market more attractive to landlords and that, in turn, may result in “unintended consequences” with the most unscrupulous landlords gravitating to the student market.
There is another approach that could be taken to student renters: accept that they are a distinct tenancy group and that the maintenance of supply and the academic cycle is important but also strengthen student renters’ rights to address some obvious problems that exist in this niche sector.
The way of proceeding is to create a fixed-term student tenancy that would apply to all housing rented by students and give those tenants the following additional rights:
- Reduce the effect of early renting. It is clearly daft that many students are looking for next year’s housing in November of the preceding year. There should be a “cooling off period” that would allow students to withdraw unilaterally from any contract made up to four months before it begins.
- Stop students from paying for accommodation they no longer need. Allow students who do not take up their course of study to give one month’s notice or make a reduced administrative payment to leave their contract and give those who withdraw from their educational institution the right to give two months’ notice to leave their contracts.
- Stop joint contracts and the joint and several liability that restricts individual student rights and choices and passes on obligations to other student occupants. Many students who are on joint contracts do not really know each other, other than socially, and often for a short period of time. Give all students the right to have an individual contract so they are able to use the additional rental flexibility outlined above and stop one student from being responsible for the debts of another.
- Stop restricting access to the student accommodation market by removing the need to have guarantors. This is particularly problematic where students have no family able to do this and discriminates against international students, many of who end up paying a whole year’s rent up-front. In the main, students are reliable rent payers and often pay rent further ahead than many other tenant groups: there is no evidence that students are bad payers. Landlords should bear the commercial risk of non-payment as part of renting to this niche market.
- Set up a dedicated ombudsman/redress scheme specifically for the student market. This scheme should be able to take fast action, make awards that recognise how poor-quality service in housing can impact badly on academic performance and make realistic redress payments that recognise that linkage. Under all the current redress schemes, the effect on academic performance is not taken into account.
These additional rights would be big “wins” for many students and would remove much of the unfairness that currently affects student renters.
Educational Institutions, Students’ Unions, Intermediary Bodies and Voluntary Actions
All of these bodies should accept that legislative tenure reform is only part of the answer to improving student housing conditions; there is still much work that can be undertaken locally to improve student housing in the context of maintaining support, wellbeing and health:
The idea of student living strategies, linking together all educational institutions, students’ unions and the local authority to look at housing for students across all years of study, has been flagged by UUK, HEPI and Unipol since the widespread housing shortage that occurred over summer of 2022. This longer-term strategic approach to supply, demand, affordability, planning, housing standards and advice in a locally joined-up way is a good way of both taking stock and planning for the future in an informed way. There is evidence that shorter-term considerations relating to recruitment and university finances are nudging this type of initiative off the page for many educational institutions, and that must be resisted.
As most off-street shared student housing is now licensed by the local authority, student complaints and poor-quality housing standards need to be linked to the operation of local authority licensing systems, which should ensure a reasonable quality of dwelling. If licensing is not able to ensure this, then it is not working properly and should spark a bigger debate about its longer-term ability to deliver what was originally envisaged by policymakers.
Accreditation remains important. The Government accepted that their approved Codes really do ensure set standards are being met in PBSA and these could easily be extended to widen student rental rights and offer a full redress system where problems occur.
In the HEPI Blog by Calum Macinnes, Chairman of SAPRS (Student Accredited Private Rental Sector) (13 November 2023), he proposed a voluntary code of conduct, establishing standards of conduct and practice for the management of off-street properties, as distinct from PBSA, aimed at creating a framework of standards to facilitate effective and fair treatment of students. This was also proposed in the written evidence submitted to Parliament by the SAPRS Renters (Reform) Bill in a paper that argued that such a Code should give exemption from that Bill for off-street suppliers who signed up, just as applied to PBSA.
The fact that PBSA National Codes have been operating successfully since 2004 with an as yet unwritten Code with no established membership is clearly problematic. But there is merit in the idea of establishing an accreditation Code, recognised and approved by the Government covering off-street student housing. This would play no role in the proposal made here of establishing a specific student tenancy, but it would be a useful tool by which better landlords could be recognised under the current licensing system, and it would increase the trust of students and their parents in those that had voluntarily chosen to be accredited in a properly policed and verified system.
Many educational institutions currently run accreditation schemes (or do so through an intermediary such as Decent and Safe Homes), and some, in Leeds, Nottingham, Liverpool and Manchester, do so between all educational institutions and the local authorities within their areas. These schemes have a good track record of achievement and have been as successful as they could be without the fillip of central government recognition and their content and governance mechanisms would be the obvious starting point in developing any off-street Code for Government approval.
Conclusion
This Blog argues that student housing must be seen as having specific characteristics and those should be recognised in any future legislation in the development of a specialist “student tenancy”.
In developing such a tenancy, the deficiencies of how students currently rent their rooms (often too early in the year, locked into contracts when they are no longer studying away from home and with legal rights compromised by joint liability between house sharers) should be addressed.
Treating students differently does not imply that they are “second-class citizens” but recognises the important links between good housing supply and standards and academic achievement. It is important that student housing does not suffer from collateral damage as much-needed additional protections are added to the rest of the private rented sector.
Finally, tenure reform needs to be accompanied by both local and national initiatives to improve student information, advice and housing standards within the context of locally built strategic housing plans.
