Levelling up, housing and communities secretary Michael Gove has introduced his (very) long awaited Renters (Reform) Bill to Parliament.
And the big news is that as it’s broadly as was outlined in the renter’s reform white paper back in June 2022, it’s generally a set of proposals that the circa 700,000 students in HMOs ought to be celebrating about – given it will strengthen their rights and give them easier access to tools to enforce those rights.
The suggestion had been that the powerful landlord lobby had somehow “got to” Gove and his team, with a drumbeat of stories in The Times and the Telegraph all suggesting that the government would have to back off or water down a package of measures designed in particular to protect vulnerable tenants.
As well as all the other “anti-landlord” measures in there, two caused instant, vociferous and specific objection from the landlord lobby – insofar as they saw a problem for the student section of the private rented sector.
Tiny violins
The first was a proposal to allow tenants to serve notice to quit on two months’ notice. The student part of the market is almost unique insofar as landlords and lettings agents will often sign students up to a contract almost a year before they move in – and hold students to those agreements if they’re later keen to back out, perhaps because of academic progress or a falling out with proposed housemates.
Students and SUs have long run “don’t rent yet” campaigns to enable students to think properly about where they might live and who they might live with – a harder position to maintain since supply has been tightening.
Being able to back out on two months’ notice will be a real boon for international students who are often asked to pay a year’s rent upfront, given that in those circumstances landlords would have had to issue a partial refund.
But landlords were even more concerned at the abolition of fixed term tenancies and the removal of “no fault” evictions – designed to give more security to tenants in general that they will be able to make a rental property a home.
Landlords lobbied hard against – including pulling emotive mental health levers over supply concerns, on the basis that they would be unable to let a property if a single contract (or joint contract set of) tenants wanted to stay on a while but then left midway through an academic year, making it harder to re-let to students.
They didn’t mention that having new students every year allows for decidedly dodgy profits to be made by levying unfair charges through the tenancy deposit, and of course new contracts every year makes it much easier to jack up the rent.
They also suggested that that may mean more non-students living with students, and crucially landlords simply leaving the student sector altogether.
Hold the line
Throughout the process, the government maintained the line in the original white paper – that save for purpose-built student accommodation (ie halls, both university and privately run) where the changes wouldn’t apply, students and citizens are categories that are too permeable to maintain different regulation:
Most students will continue to move property at the end of the academic year. However, for certain students, this is not appropriate, for example because they have local ties or a family to support. It is important that students have the same opportunity to live in a secure home and challenge poor standards as others in the PRS. Therefore, students renting in the general private rental market will be included within the reforms, maintaining consistency across the PRS.
There were countless blogs, meetings, submissions to the commons levelling up, housing and communities committee and even a joint letter with Universities UK – and at various stages the National Residential Landlords Association (NRLA) sounded bullish on their chances at securing an exemption for properties let to students.
But while there may well be attempts at amendments as the legislation works its way around parliament, no such exemptions have turned up here.
Whether there really will be a mass movement of students exercising their cancellation rights or students staying on in a property is an open question – the NRLA would have us believe that a less open question is the inevitability of already grumpy landlords taking this as a nudge to sell up or rent to other people:
NRLA Ben Beadle insists the government must recognise the serious concerns of landlords letting to students about open-ended tenancies. He argues that without the ability to plan around the academic year, students will have no certainty that properties will be available to rent when they need them. “We will continue to work with the government, MPs and peers to ensure the bill is workable and fair to both responsible landlords and tenants.”
Beadle’s position does though create a legitimate supply concern in a year where a full blown student housing crisis looks ever more inevitable – so this could go either way as the bill goes through parliament.
No guarantor, no tenancy
The two months’ notice to quit thing may well also put particular pressure on for international students, and so for international recruitment. Landlords already insist on a year’s rent as an alternative to a guarantor for large numbers of international students – the prospect of having to refund unused months if an international student quits might well cause landlords to simply refuse to let to international students if they perceive them to be a greater risk than their home domiciled counterparts.
The other puzzles will be timing and associated rent concerns. If a landlord can’t tell when a student might leave, it’s hard to offer a contract to a prospective student tenant until they’ve had that notice to quit. If a contract runs September – September that might require a student to be around in a city in June when a tenancy becomes available – not always easy for a home domiciled student let alone an international one.
Of course plenty of cash-strapped students will clock that where they used to need to sign up for a 12 month contract, they’ll now be able to issue a notice that they’re off in late February if their formal teaching ends in late April. In turn, landlords may well pile 12 months of rent into 9 – leaving those who need a longer stay (nursing students, teaching students, care experienced and estranged students and most PhD students) facing much much higher rents almost instantly.
One other major objection from the landlord lobby was that they would lose the right to make so-called “no fault” section 21 evictions. Gove’s proposal was actually to make it easier to get someone out, but to restrict the grounds to stuff like a landlord selling their property if they want to, moving in a close family member, or when tenants wilfully do not pay rent – and under pressure from the landlord lobby, he has added “anti-social behaviour” to the list. That will almost certainly cause a number of student tenants concerns for obvious reasons.
Supply and demand
Elsewhere in the bill, much of what we saw in 2022 is intact. A new ombuds will provide quicker and cheaper resolutions to disputes – a kind of Office of the Independent Adjudicator only for tenants – while a new digital Property Portal (like a sort of statutory register of private rented sector houses) will enable landlords to understand their obligations and help tenants make better decisions when signing a new tenancy agreement.
In addition:
- Annual rent increases will be allowed – albeit that anything above market rates will allow a tenant to more easily access a tribunal process to challenge;
- There will be a reformed courts process in the event of an eviction, where more of the process will be digitised to reduce delays;
- The Decent Homes Standard will be applied to the private rented sector for the first time to tackle stuff like poor safety or mould; and
- Tenants will also be given the legal right to request a pet in their home, which the landlord must consider and cannot unreasonably refuse – a measure that is more important than many realise for mental health.
The proposals would also, as signalled, make it illegal for landlords and agents to have blanket bans on renting to tenants in receipt of benefits or with children (a similar provision for international students would really help here), and the bill also proposes to strengthen councils’ enforcement powers and introduce a new requirement for councils to report on enforcement activity – although as ever if they have little money to carry out that enforcement, powers and metrics won’t really help.
Clearly, as signalled above, the issue here is supply. The NRLA and others will continue to argue that the proposals will choke the supply of PRS homes when lack of supply is causing record rent increases as it is. But even if they’re scaremongering, universities also have a level of control over the demand they’re placing on the local market through student recruitment. And if supply is tight, all the otherwise welcome measures here will be worthless if a student daren’t move out or quit if there’s nothing else left in the area.
Universities would do well to follow Universities UK’s advice on being proactive about the local housing situation – before a potential Labour government starts looking around to build on Gove’s proposals and gets under pressure to address the impending headlines about homeless students that are almost certainly coming in the Autumn.
As has been covered by (some of) the national press, the average landlord has 3 rental properties, so I can foresee many of those selling off their rental properties, some no doubt will be bought up by the likes of the Sahota clan (and other mega landlords) who will use their legal practices to write the contracts as tightly as possible, to ensure the continued income from student renters (and maximum fleecing opportunities). Universities who ‘rent’ housing to students had better be paying attention, one I know only too well had a very large legal bill when it finally successfully evicted a ‘perpetual student’ and their family, these new rights are very likely to cause the sector problems, not just private landlords.