By The introduction of the Renters’ Rights Bill brings significant changes to the rental sector for landlords and property investors. For those operating within niche property sectors like Purpose-Built Student Accommodation (PBSA) and Student Houses in Multiple Occupation (HMOs), it’s essential to establish what these changes will mean moving forward.
One of the key aspects of this reform is the emphasis on safeguarding tenant rights and that extends to student lettings, and understanding how these changes apply to the sector will be important for landlords in ensuring ongoing compliance.
Renters’ Rights Bill Update
The committee stage of the Renters’ Rights Bill is scheduled to commence on April 22nd 2025, with subsequent proceedings on April 24th.
So far, key reforms outlined in the Renters’ Rights Bill include:
The Abolition of Section 21 ‘No-Fault’ Evictions
Under the Renters’ Reform Bill, to improve tenant security, landlords will only be able to end tenancies under valid grounds.
Mandatory Rolling Contracts
Switching to rolling contracts from fixed-term leases, as mandated by the Bill offers tenants more flexibility but, for those operating student accommodation, could risk disrupting the established academic rental cycle common to HMOs.
Limits on Upfront Rent Payments
In a bid to reduce financial pressure on tenants, a reduction in the cap on requiring more than one month’s rent is set to be introduced.
Notice Periods
The new Bill mandates a two-month notice period for tenants ending tenancies, double the current one month, providing landlords and PBSA operators with increased certainty.
Higher Civil Penalties
Penalties for tenancy law violations are set to soar, jumping from £7,000 to £40,000, underscoring the critical importance of legislative compliance and robust operational practices.
Private Rented Sector (PRS) Ombudsman
The introduction of a new PRS Ombudsman will mandate landlord registration, regardless of property management, to enhance accountability and tenant rights.
Decent Homes Standard for PRS
Implementing the Decent Homes Standard in the PRS will significantly improve rental property quality, ensuring minimum standards are met.
For a full breakdown of what to expect, follow the link to the Government’s Renters’ Right Bill Guidance.
Renters’ Reform Bill: Impact on Student Accommodation and HMOs
The UK property market offers diverse rental options, catering to a wide range of needs. Notably, the student housing sector has experienced rapid growth over the last decade, and the upcoming Renters’ Rights Bill will certainly impact this dynamic subsector.
The government’s Renters’ Rights Bill aims to “transform the experience of private renting” by ending ‘no fault’ evictions and providing renters with greater security and stability. Many student landlords have raised concerns about the Bill’s impact on the student housing market, particularly given the short letting window between academic cycles.
Key concerns for landlords operating student accommodation include the cyclical nature of student lets, which aligns with the academic year, and summer void periods. Currently, fixed-term contracts are standard practice in PBSA and student HMOs, reflecting students’ tendency to vacate during summer breaks.
However, there are some exemptions in place for the student rental sector.
University Lettings and PBSA
- Universities maintain exemptions under paragraph 8 of Schedule 1 of the Housing Act 1988 for lettings to students.
- Ground 4 possession enables short-term letting to non-students (e.g., summer conferencing).
- Purpose-Built Student Accommodation (PBSA) is exempt, provided providers are registered with government-approved codes and will be governed by the Protection from Eviction Act 1977.
HMOs
- Ground 4A possession allows landlords to regain possession of HMOs let to full-time students for re-letting to new full-time students.
- Landlords must provide written notice of their intention to use this ground before granting the tenancy.
Whilst it’s important to ensure that PBSA developments and individual units within them adhere to the latest regulations, at the time of publication, the Renters’ Rights Bill primarily excludes PBSA operated by providers who are members of a Government-approved Code.
These PBSA providers utilise common law tenancies, which fall outside the scope of the assured tenancies addressed by the Bill. This exemption offers a measure of relief for investors who hold units within PBSA schemes. However, it’s essential to keep track of any potential changes to the law to ensure the accommodation continues to meet regulations and standards.
Landlords are advised to proactively assess their rental portfolios and seek professional guidance to ensure compliance with the Bill’s anticipated 2025 implementation. Landlords should allocate sufficient time and resources to comprehend the reforms and their potential impact on business operations.
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