Gove backtracks on student renters’ rights. HEPI agrees

That was quick. The Telegraph is reporting that Levelling Up, Housing and Communities secretary Michael Gove is to “backtrack” on renter reforms.

Jim is an Associate Editor at Wonkhe

It reports that the government will introduce an amendment to its Renters (Reform) Bill to prevent “damage to landlords” of student lets in England.

As it stands the changes proposed by the government “risk creating student homelessness, housing instability, increased rental prices and further mental health challenges”.

Those are the rather alarmist toplines from a well-timed Higher Education Policy Institute “media briefing and policy note” that has been published this morning and weighs in behind those calling for an amendment.

They are similar to the lines being put out by the National Residential Landlords Association (NRLA), which has also said that the proposals would reduce supply, push up rent, cause “chaos and confusion” and, it says, could have “a damaging impact on students’ mental health”.

So what’s going on? For a number of years now, both tenant’s rights campaigners and the government have argued that tenancies that are for a fixed period of time lock tenants in, prevent tenants from moving if their circumstances change, and mean that tenants cannot end their tenancy if their property is too unsafe to live in, or the landlord has not completed essential repairs.

So the proposal in the Bill is to make all tenancies “periodic” (ie open-ended), which it says will give private tenants the right to move whenever they need to, or where the landlord is not fulfilling their basic responsibilities. Tenants will need only to provide 2 months’ notice when leaving a tenancy.

That does raise interesting questions for the student market. Lots of landlords and agents like to sign students up to properties in advance – but if a student has the right to stay at the end of an academic year, that would theoretically stop a landlord from agreeing a tenancy agreement on that room until that student (or group in the case of a joint tenancy) has issued their 2 months’ notice.

We may well move from students panicking about signing early, to students all having to sign (very) late, perhaps during their exams.

There could also be some complications for students who have individual contacts with a landlord in an HMO that surround council tax, and a desire on the part of a landlord to fill a room with a non-student if a student stays on and then leaves halfway through an academic year.

There are complexities for joint tenancies. At present an individual student in a joint tenancy can serve a “Notice to Quit” on behalf of the group without permission from that group – and so with the two months’ notice right, if the landlord was then able to swap the group out for another, the remaining students would be rendered homeless.

For HEPI, this creates a set of problems:

Students would no longer be able to rent a house with a group of their friends – a highlight of the student experience for many. Instead, there will be a bun fight over individual rooms in houses with strangers. Students will still be seeking these rooms as they become available on two-month notice periods. It is concerning that students could be forced into a bedsit lifestyle, with the inevitable knock-on effects of loneliness and mental health on the student population. Landlords may be resistant to this move due to licensing restrictions, and the advantage (to Landlords) of joint tenancies, that each tenant is liable for the rent of all tenants.

That feels oddly alarmist. Joint tenancies are hopelessly inflexible for students because they might fall out or have different needs over time, and the main reason that landlords like joint tenancies for students is that they get to sign up a group early, and then if one wants out the landlord knows they’re getting 12 months rent regardless.

So my guess is that what the change will do is encourage landlords to offer single tenancy agreements for each student in otherwise shared houses, which isn’t quite the “bedsit lifestyle” of loneliness HEPI seems keen to scare us about.

It’s true that it may well all make house hunting harder if you’re in a group. But the whole point here is that it removes the risks associated with being jointly and severally liable for 12 months’ rent.

HEPI’s solution appears to be to ignore or sideline those risks, and to just to scrap the new rights for students:

It is recommended that provision is made for off-street student accommodation to be given the same exemption from the abolition of FTTAs as has been provided for purpose-built student accommodation.

And that’s the NRLA’s proposal too:

Our recommendation is that the government add a possession ground that, subject to the tenancy qualifying as a student tenancy, could be used by landlords to bring a periodic tenancy to an end in line with a point in the academic year. They’d need to define student tenancy clearly and require adequate notice, but it would be relatively simple and not undermine the wider objectives of the bill.

The government’s position on this – as it has been throughout the consultation that led to the White Paper and now the Bill – is that not all students are as those imagined in the cliches:

… responses highlighted the differing circumstances that students may be in – many have families, live with non-students or have local ties to an area – and seek the same security that other tenants will have. Students, equally, may face circumstances beyond their control and need to vacate a property early, or face being locked into contracts for poor quality housing.

As result, the line on a “student carve out” has consistently been as follows:

Although most students are likely to continue to move in line with the academic year, we do not think it would be proportionate or fair to maintain insecurity and inflexibility for student tenants, and students renting private accommodation will therefore use the same periodic tenancies as all other tenants. Given the diversity of student households, any legislative carve-out would also be likely to be complex or very narrow, making it challenging for landlords and tenants to understand their rights.

And Shelter agrees:

We support providers of purpose-built student accommodation (PBSA) being exempt from the abolition of Section 21. However, other providers of student accommodation, that is to say, normal private rented accommodation usually let to students, should be bound by the new legislation.

In support of its position, HEPI’s new Director of Director of Policy and Advocacy, Rose Stephenson, says that “the government’s own report” as well as “evidence following similar reforms in Scotland” shows that abolishing fixed term tenancies will lead to a reduction in the amount of housing available to students, with consequent increases in student homelessness, and further increases in rental prices.

The “government report” turns out to be a report from the Levelling Up, Housing and Communities Committee to the government, which calls on ministers to retain fixed-term contracts, but notably doesn’t call for the scrapping of the right to cancel on two-months notice.

And the reference to evidence in Scotland comes from this research on purpose-built student accommodation (PBSA) and student housing in Scotland, which argues:

It is widely accepted across the sector that, because of the new tenancy and the experience of Covid-19, private landlords are now moving away from that market and looking for more long-term tenants with less chance of void periods. Initial qualitative evidence from Glasgow (Gibb, 2021), as well as from sources interviewed in chapter 3, suggests that this shrinking of the student HMO sector is putting upward pressure on rents.

Even if we set aside the difficulty of disentangling Covid from the changes to tenancies, the “widely accepted” claim here looks like it’s on shaky ground – and certainly some distance from demonstrable cause and effect.

And even if the effect would be to cause landlords to move away from the market and to constrain supply, the question is whether that should cause legislators to leave students unprotected and trapped in onerous contracts.

The HEPI paper oddly avoids addressing the government’s rationale that many students have families, live with non-students or have local ties to an area, and so seek the same security that other tenants will have.

The HEPI paper also ignores something important that the government notes – that students may face circumstances beyond their control and a need to vacate a property early, or face being locked into contracts for poor quality housing.

ACORN’s national policy officer Anny Cullum argues that students need protection from “unpleasant” renting situations they have to fight to get out of:

Students … find themselves locked into rented properties with a number of issues, from disrepair to bullying and harassment, for the entire year of their studies… This significantly affects their mental health, wellbeing and education.

That’s also something we don’t find considered in the HEPI paper.

Tenants’ rights group Generation Rent said there should be no need for students to be treated differently from any other tenant:

It would be unfair on households who happen to have a member studying to be at a higher risk of eviction than they would if every adult was in full-time work.

Not an issue you’ll find referenced in the HEPI note either.

Crucially, the main reasons for ending Section 21 and giving tenants the ability to quit are about tipping the balance a bit – giving tenants the power to complain and threaten to quit to get action taken by their landlord over safety and quality without threat of eviction.

This, remember, is in a country where the government calculates that almost a quarter of homes in the PRS fail the government’s definition of a decent home – which means free of serious hazards, a reasonable degree of thermal comfort, in a reasonable state of repair and reasonably modern facilities and services.

You’d expect the NRLA to say what it it has said, but we might reasonably expect HEPI to at least engage with the above issues and propose alternative ways to deliver the sort of flexibility and safety that students need in a student housing market that clearly doesn’t work.

Considering how student-specific enforcement might be enacted, or addressing the “landlords trap them” issue ought to be on the cards. Doing real planning, or considering student housing as a type of social housing, are also areas that might usefully be explored – rather than simply calling for a free-er market.

Put another way, as in the student numbers debate, there are real trade offs between quality and quantity. That landlords want to keep things as they are is unsurprising. That HEPI is siding with them, opting for quantity in the name of “opportunity”, is disappointing.

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