Will rental reform help students in halls?

Rory Hughes is a housing policy and campaigns consultant

I wanted to use this final article in my series to explore the potential impact of the Renters Reform White Paper on Purpose-Built Student Accommodation (PBSA), given it gets so little direct mention in it.

To clarify the current situation, most students renting in university-owned PBSA rent via common-law tenancies or license agreements – effectively less secure versions of the traditional Assured Shorthold Tenancy (ASTs) regime which is used in the “normal” Private Rented Sector (PRS).

These ASTs are, however, the standard tenancy in private-sector PBSA. The White Paper explains that PBSA tenancies will be exempt from the periodic tenancy reforms as long as the provider joins one of the three approved Codes of Standards/Practice that NUS helped establish and continue to help govern. These Codes currently cover the vast majority of the PBSA sector, but this requirement is a useful extra stick to bring the remaining unruly providers into line. This all makes sense given that for PBSA, the tenants’ status as students is so essential to the type of accommodation.

A key question that remains though, is whether students in university-owned PBSA will be shifted onto a version of the more secure ASTs used in private PBSA, OR whether the tenancy rights of students in private PBSA will be levelled-down to the common-law level used in university-owned PBSA. The former is certainly beneficial to avoid a reduction in tenancy rights for the majority of PBSA renters who now reside in the private sector.

There are also universities which “head-lease” properties from local PRS landlords. Effectively, this means they rent PRS homes, and then sub-let them to their students and act as the managing agent. Intuitively, given these homes are being used as a type of PBSA by the university, they should also be exempt from the new periodic tenancy regime.

As student PRS landlords keep kicking up a fuss about the forthcoming periodic tenancy regime, this type of head-leasing may become a more attractive option for them – and may put universities in a stronger-position to explore it as an option as part of their accommodation strategies. Were this to happen, ensuring universities step-up their management of these properties could be a good opportunity for student renters.

Tenancy deposits

A follow-on question from this concerns tenancy deposits. Currently, private-sector PBSA providers are required by law to protect any tenancy deposits they take from students in a government-approved scheme – as is the case in the wider PRS. Universities are currently exempt from this requirement due to the weaker tenancies they utilise.

When I was member of the government’s working group designing their White Paper proposals for tenancy deposit reform, we consistently argued that universities, where they take tenancy deposits, should be required to protect them in an approved scheme as all other PRS landlords must. Again, the student movement should seek that the rights of university PBSA tenants are elevated here to the private sector level and not vice-versa.

Landlord register

We are also currently uncertain about whether universities and PBSA providers will be required to join the new landlord register but I would argue that, as is currently the case in Scotland, they should be required to so as to facilitate better data, transparency and enforcement. Indeed, there may even be space for the student movement to argue for additional pieces of information to be made mandatory on the register for PBSA providers. For example, they could be made to outline what type of partnership arrangement is in-place between a university and private sector PBSA provider – given this is usually such a murky area.

Ombudsman

The role of the new ombudsman in PBSA is a tricky one, and to explore how the reforms will impact the sector we need to look at how the various ombudsman, codes of standards and new regulations could interact.

For students in university-owned PBSA, they are currently forced to go to the Office of the Independent Adjudicator (OIA) for accommodation-related redress. There is a case for this to continue, if there is a close-working relationship between the OIA, the new PRS ombudsman.

Were it to do so, the university PBSA Code of Standards run by UUK/CUBO, which complaints are often judged against, should also be beefed up significantly and made more independent of the university-sector. Universities sign-up to this Code almost exclusively because it allows them to be exempt from expensive HMO licensing. An ombudsman should consider utilising this leverage to more proactively strike off universities from the Code when serious breaches occur.

For students currently renting in private sector PBSA, there is no such ombudsman in existence currently. However, when students are renting from a PBSA provider that is a member of the UNIPOL voluntary Code of Standards they can currently go to the Code with their complaints, but this Code was not initially designed to offer mandatory financial redress when things go wrong.

However, as a result of the White Paper proposals, membership of this Code will become de-facto mandatory (as PBSA providers will otherwise have to use periodic tenancies) and after a series of scandals around late buildings when I was at NUS, we worked in partnership with UNIPOL to design the first bit of mandatory financial redress into this Code, which you can read about here. Equally, the Code’s Tribunal does often recommend financial redress when the landlord has been at fault. It is an open-question then as to whether this Code should be beefed up to become the private-sector PBSA ombudsman, or whether it should somehow dovetail its very useful work with the new PRS ombudsman.

How the new Decent Homes Standard and regulations on energy efficiency and green heating systems will impact PBSA is also an interesting, related question. The Codes of Standards currently do some of this work of upholding decency standards, but we know that there are regularly examples of PBSA in disrepair, or just general poor-quality, in both universities and the private sector. Again, whether the Codes should be beefed-up to reflect the spirit of these decency regulations, or whether these regulations should be applied more directly to all PBSA is an open question, but certainly some change is needed.

These various options could result in a complex multitude of different decency and energy efficiency standards and redress routes for student renters, which is far from ideal, and more work certainly needs to be put into this section of the White Paper.

And to finish, I doubt that the requirement for landlords to allow tenants to have pets is going to extend to PBSA…prides of cats in the hallways seems problematic.

A strategy for rents and PBSA

Other than the above, the three key questions on PBSA that are missing from the White Paper are those of rents, ownership and supply.

There is some (overblown by the NRLA) risk that, because the new periodic tenancy regime will introduce more “uncertainty” into the student PRS landlord market, and a potential greater risk of void rooms/houses, that these landlords will seek to balance this risk by pricing in higher rents across the board.

However, this argument that new regulations will cause rents to rise is deployed by landlords at every opportunity no matter how minor the reform. We simply cannot live in a society where a rent-hike gun is held to tenants and the government’s heads to prevent all reform. Furthermore, given the logic deployed, rents should come down whenever regulation or operating costs are reduced, but this never happens, does it?

It is also clear that regardless of regulation, we have been facing an ongoing crisis in the cost of rent for years in PBSA and the PRS and this is the core issue that needs to be addressed. Rent controls is the most effective option and they exist in UK social housing, are being designed for the PRS in Scotland, used to exist in the PRS in England and continue to do-so in many countries across the world.

As the cost-of-living crisis develops, and renters reform is on the cards, there is a golden opportunity to make a renewed argument for rent controls as the Bill develops. Rent controls for existing properties could be combined with a demand to extend planning powers to local authorities across the country, so they are able to deploy the same affordability and ownership checks on new PBSA that Greater London and Combined Authorities in Manchester, Liverpool and elsewhere can.

It is also not necessarily an entirely unfounded fear that some landlords will choose to convert their student HMOs into homes for young professionals, families or holiday lets as a result of the reforms. And, once this happens, local authorities in student areas who often deploy Article 4 Directives that restrict general rental housing being converted into student homes could then restrict these from returning to the student market and reduce availability for students.

Were this to happen as a result of the reforms, perhaps we would see an increase in PBSA development to accommodate this new demand. This could be problematic, and so the development of a proper government strategy alongside the Bill on PBSA regulation, ownership, affordability and supply – as well as monitoring the impact of the wider reforms on the student sector – should be a core ask of the student movement as the Bill progresses.

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