Won’t somebody think of the landlords

The Renters’ Rights Bill got its second reading in the House of Commons yesterday.

Jim is an Associate Editor (SUs) at Wonkhe

It was obviously approved – second reading is always about the principle of the Bill and the government has a thumping majority – though the volume of speeches on both sides suggests it’ll have a bumpy ride both at amendments stages and in the Lords.

Most of the afternoon was spent hearing Conservative MPs open their speeches with a warning not to demonise landlords, and Labour MPs explaining why they should be demonised.

Desmond Swayne (New Forest West, Con, declared landlord) was first to talk student accommodation. His concern was giving tenants the right to cancel a tenancy – because re-letting a property within the academic year can present a considerable difficulty.

No mention, of course, of the fact that once a student for a house that they’re on the hook for a year’s rent – even if they drop out or their circumstances change. Also, I think I can argue, a “considerable difficulty”.

Secretary of State Angela Rayner said that the Bill strikes a balance by accommodating the unique circumstances of students – the ability of landlords to evict student HMOs in the summer.

That doesn’t accommodate the circumstances of students whose academic year doesn’t run from September to September, might need to stay on in the city as a graduate, or who as a care leaver face no other housing to fall back on. Students are “other” people, see – the ones in MPs’ imaginations.

Gideon Amos (Taunton and Wellington, LD, declared shareholder in French Weir Affordable Homes) was concerned that the provision allowing landlords to hurl students onto the streets between June and September only applied to HMOs. What about turfing other students out? No response from the government on that.

The afternoon had begun with a large number of Conservatives in the chamber lined up to speak – but at just the moment that the leadership contest gossip dropped, their side suddenly cleaned out, giving Labour, Green and some Lib Dem MPs a clear run in the tenant corner.

Siân Berry (Brighton Pavilion, Green) was all for rent controls – highlighting the representations she’d had from her Acorn branch and NUS over the need to secure expensive guarantors:

It fuels discrimination against working-class, estranged and international students, and fuels homelessness among students.

Helen Hayes (Dulwich and West Norwood, Lab) too was worried about guarantor arrangements – partly because one of her constituents’ son had died by suicide:

The tenancy, which had not started when this young man died, included a guarantor agreement signed by his parents. After their son’s death, the letting agency insisted that the agreement applied even in the event of a tenant’s death and, shockingly, began pursuing my constituents for rent payments. While facing the unbearable loss of their son, my constituents were forced to find another student to take on his tenancy in order to be relieved of their responsibility for the rent.

In Abtisam Mohamed’s (Sheffield Central, Lab) constituency, nearly half of her constituents are private renters, many of them students – and having visited some of the properties, was horrified by the extent of the damp, mould and disrepair that many are forced to live with. She was also keen to see a cap on in-tenancy rent increases at the lower end of either inflation or wage growth.

The government’s plan is merely to limit in-tenancy increases to once a year, and give tenants the ability to challenge those increases if above market rates. Of course because students move out a lot, that won’t work in the student market – Mohamed could start by at least asking the government to apply its rent increases provisions to properties not tenancies.

John Cooper (Dumfries and Galloway, Con) had “seen the reality” of similar measures to those in the Bill in Scotland, which he said had driven up costs for renters, reduced choice, and made it “almost impossible” to get student accommodation in our wonderful university cities. He may be confused about the “reality”, which is actually that Scotland’s student housing crisis has been caused by unrestricted numbers growth, as we demonstrated on the site a while back.

Summing up for a sparse opposition, David Simmonds (Ruislip, Northwood and Pinner, Con) didn’t want to see a situation where landlords, wary of a two-month notice period, decide to take the property off the student market and put it somewhere else. The lack of evidence that that’s happened in Scotland had passed him by. Maybe he’s not a regular reader of Wonk Corner.

There’s plenty of other problems with the Bill. Nobody seemed concerned about Purpose-Built Student Accommodation, and the way in which the Bill’s exemption of it will see a scenario where students’ rights in those properties will end up much worse then those in off-street housing. There’s also scope to amend the Higher Education and Research Act to give the Office for Students (OfS) the duties over information on supply and pricing that the Augar review imagined – and to put into law Universities UK’s guidance on planning and supply. DfE seems nowhere to be seen, as usual. Not its department, see.

Dodgy “all-inclusive” bills rent deals that are often nothing of the sort also need a look, and there’s an opportunity for local authorities to be collaborating with universities and SUs on enforcement, as we’ve seen across Europe. The enforcement that is there in the bill in the form of the new Ombuds is also going to need more thought given that students are likely to move out (or be turfed out) by the time it’s able to resolve a complaint.

It was left to Alex Sobel (Leeds Central and Headingley, Lab/Co-op) to take up the mantle of former Sheffield Central MP Paul Blomfield’s unofficial role as student champion of the house, whose contribution bears reading in full:

As the MP for a constituency with one of the largest private rented housing sectors in the UK—it has 17,740 private rental properties, the majority of which are rented to students—I want to use the debate to highlight problems faced by student renters, both in my constituency and across the country. Students are shouldering the burden of 14 years of Tory mismanagement of our economy. The dual housing and cost of living crisis is being compounded by landlords making it increasingly difficult for many students to secure housing. This leaves many in increasingly precarious situations.

Students in my constituency have told me of landlords asking them not just for a UK guarantor—the criterion for which is that the guarantor must own a UK property—but for deposits of up to 100% of annual rent. Such requirements disproportionately affect working-class students, care leavers, and those estranged from their families—groups that are already more vulnerable to poorer economic, educational and health outcomes. International students, too, face significant challenges, as most do not have family members with property in the UK. As one of my constituents, an international postgraduate student at Leeds University, told me:

My only viable option was using the guarantor service ‘Housing Hand’, which costs me an additional £50 a month on top of rent. I am a PhD student receiving the UKRI minimum stipend…The cost of living for food and rent alone is already difficult on this Toggle showing location ofColumn 375stipend, and, during the final week before the stipend is paid each month, I often struggle to maintain a healthy and balanced diet due to financial strain.”

Research conducted by students from the Centre for Homelessness Impact found that just 36% of universities provide help with rent guarantors, that even fewer provide a rent guarantor service for students, and that, as universities themselves are facing extreme financial difficulties, such a service will become ever more unlikely.

Renting as a student is already an uphill struggle. We know, for example, that student accommodation prices have increased by 61% since 2012. Information from the National Union of Students shows that two in five students have considered dropping out because of the cost of rent. When we are trying to encourage people to attend our world-leading institutions, which strengthen the skills potential of our country’s workforce, why do we put up so many barriers?

Our universities are the UK’s strongest source of soft power. International students in particular are left with nothing but bad choices: they must either find a UK guarantor or pay six months’ rent, or more, up front to their landlord. As one student told the all-party group for students:

International students often face more challenges than home students. We have heard stories of students paying months of rent, only to find out that they have been scammed, and that the place they thought they’d secured does not even exist.”

It is for those reasons that I would like the Government to consider banning landlords from demanding either UK rent guarantors or huge up-front payments, and perhaps limiting deposits to just three months’ rent. I would also like them to end the pressure for joint tenancies to be signed too early in the academic year, so that students need not commit to accommodation before they are ready, creating artificial panic in the market. Ultimately, we must remove barriers for care leavers, students and international students. We have heard from students that access to a rent guarantor is often a determining factor in their ability to continue their degree, or even access a university education in the first place.

Everyone deserves the opportunity to succeed in their academic journey without the added stress of housing insecurity. The Government have the opportunity, through this Bill, to break down a major barrier to all students’ right to pursue higher education. I hope that they will work with me on this.

3 responses to “Won’t somebody think of the landlords

  1. I feel compelled to leave a comment in case anyone actually reads and buys into Wonkhe’s b*llocks.

    I am a student landlord and have been for over 10 years. I like to think that I am one of the good ones. Yes, rents have gone up since 2012. So has inflation and so have interest rates. Significantly so, in fact, but everybody knows this.

    Rents are undoubtedly expensive, but they have to be. Mortgages are expensive and so is maintaining a large student HMO property. There is a raft of regulation to comply with and, unlike any other business (which is ultimately what this is), finance costs cannot be offset against profits for tax purposes. Landlords are leaving the sector for these reasons whether Wonke chooses to believe it or not, and the RRB will be the final straw for many. Fewer landlords = fewer available properties = higher rents.

    This problem is not going to be solved by increasing the regulatory burden on landlords and bringing in rent controls. Much like the wider housing market, the government should be looking for ways to encourage investment in the sector. This would increase choice for renters and bring down rents as a result.

    I understand that the cost of going to university is prohibitive for many, but if the government’s intention is to drive out smaller landlords by making the sector financially unviable then this will leave renters with a choice of PBSA or PBSA, which is significantly more expensive.

    By all means continue to fly the flag for greater rights for tenants but don’t be surprised when the smaller landlords who provide cheaper off street accommodation have all quietly disappeared.

    1. England figures. Dwellings occupied only by students:

      2020 209,909
      2021 218,605
      2022 230,234
      2023 247,395

      Doesn’t look like landlords are leaving to me

  2. The number of former rental properties currently for sale should tell you what you need to know. 18% of properties listed for sale this year had also been listed for rent within the previous three years – 100% higher than the previous year and 34% higher than 2019. In 2010 the figure was only 8%.

    Landlords are clearly exiting the market already and the effects of the RRB will not be felt until next year when it becomes law.

    The student letting market is entirely different from the professional market. You might not like the fact that students are tied in to 12 month contracts but it is what makes the sector viable from an investor’s perspective. If landlords are faced with the prospect of a 3 month void period every year over summer then that is not going to be financially viable for most. And that is a best case scenario – what happens if a group wants to leave after 6 months or less? I can tell you from experience that there will is zero chance of filling empty rooms once term has started.

    You might not have any sympathy for this predicament, and that’s fine. Ultimately it doesn’t really matter to investors either. They will simply pivot to professional lets where tenant demand is consistent throughout the year, or sell up and invest in something else.

    The people that will lose out here are the students, which is the great injustice. You can only tip the balance so far in favour of one party in a contract before it becomes entirely untenable and the other party calls it a day. If you want a balanced student letting market with a choice of housing types to suit a choice of budgets then landlords should be encouraged to invest and provide greater choice. More competition = lower rents If not you will end up with one choice and that’s PBSA which is significantly more expensive.

    The RRB is in the early stages at the moment but once concrete outcome so far is that rents have gone up 5-6% across the board this year for students in anticipation of uncertainty over void periods. That doesn’t seem like such a big win to me.

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