The key changes to the Renters’ Rights Act, which became law this week, include ending Section 21 repossessions and fixed-term tenancy agreements, which makes all tenancies open-ended.
Industry figures have said this creates challenges for the student housing market, as landlords need to have the confidence that they can regain possession of the property at the end of the academic year.
The Renters’ Rights Act does allow providers of purpose-built student accommodation (PBSA) to continue to operate tenancy agreements on a fixed-term basis when they are signed up to an approved code of practice.
There has also been the introduction of 4A possession ground, which allows landlords to regain possessions of houses in multiple occupation (HMOs) for full-time students between 1 June and 30 September to let them to a new group of students. However, this only applies to student homes with three or more bedrooms and excludes one- and two-bedroom student properties.
This intends to protect part-time students and those with children, but could leave some landlords with no certainty that they can regain possession at the end of the year.
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Experts said this could disrupt the “cyclical nature” of the student housing market, limit housing options, make it harder for students to plan where they live and discourage landlords from renting in this sector.
Chris Norris, chief policy officer of the National Residential Landlords Association (NRLA), said: “Whilst we will work constructively with the government on implementing the Renters’ Rights Act, there is no hiding the disruption that will be caused to the student housing market.
“Failing to protect the annual cycle of all student housing will make access to housing, and therefore higher education, harder. It will make it all but impossible for many students to plan with any certainty where, when and with whom they will live [from] one year to the next.”
Renters’ Rights Act change could lead to cash flow pressures and lending challenges
Maeve Ward, head of intermediary sales at Together, said the Renters’ Rights Act introduces “major changes” for student landlords, especially for those renting shared houses.
She explained that previously, landlords could offer fixed-term tenancies that matched the academic year and had more flexibility in regaining possession and collecting rent upfront.
“Under the new rules, however, all tenancies will be ongoing rather than fixed, and landlords will have fewer options to end tenancies without specific reasons. Rent in advance is also limited to one month, which could make it harder to rent to international students who don’t have UK guarantors.
“These changes create uncertainty for landlords. Without fixed terms, properties may sit empty over the summer, and capping advanced rent could affect cash flow. While there are some protections for landlords who rent to full-time students in shared homes, the overall impact may lead some landlords to leave the market. This could also prompt lenders to reassess how they view student rental properties, possibly tightening lending criteria,” Ward added.
She also warned of the impact to smaller flats, as they have the same move to rolling tenancies and limits on ending agreements, but don’t benefit from any student-specific protections.
“This could make it harder to manage turnover in line with the academic year. Brokers working in this space should help landlords understand the new rules, review their portfolios, and prepare for changes in how lenders assess affordability. They should also encourage landlords to consider professional property management and stay informed about when the new rules will come into effect,” Ward noted.
Jeni Browne, business development director at MFB, agreed that the changes could “definitely complicate things for student landlords”.
“Ground 4A permits landlords of student HMOs to repossess their properties, provided they give written notice before the tenancy begins, and repossess only between June and September.
“This exemption does not apply to student landlords with smaller properties that do not constitute an HMO, which will be a tricky issue for many landlords,” she noted.
Browne added that periodic tenancies offer tenants greater flexibility to leave whenever they want and students may find it easier to vacate mid-term, which could lead to longer void periods and up administrative and financial risks for student landlords.
She said non-HMO landlords have to rely on the general Section 8 repossession grounds, but in most cases, they won’t apply, which could lead to fewer of these smaller properties being available to students.
“Brokers need to recognise higher risk levels for landlords, arising from income fluctuations and legal issues. Additionally, there could be a decline in interest in student let investments, particularly among non-portfolio landlords.
“Another consequence may be that lenders reduce their appetite for student properties due to uncertainty and lack of confidence. We won’t be able to determine if this is the case until the new system is in place and any issues truly come to the fore,” Browne added.
Louisa Sedgwick, managing director of mortgages at Paragon said, that new ground for possession under Section 8 – Ground 4A – assures possession of HMOs let to students would help landlords be confident of regaining possession of their properties, ensuring the model continues to run smoothly, as it has done for many years.
“This is important because landlords have long played a vital role in meeting student housing demand, offering an alternative to often over-subscribed university halls of residence and purpose-built student accommodation (PBSA). While institutional investment is fuelling the expansion of PBSA developments, supply falls short of demand. This will continue if landlords face barriers to investment, something that must increase to align with the growing number of annual university admissions,” she said.
Sedgwick agreed that as this didn’t apply to non-HMO landlords it could impact confidence for landlords who have historically invested in single self-contained properties, potentially reducing supply of homes that are often relied on by postgraduates and international students, for example.
But this “offers opportunities for brokers to educate their clients, helping to add value to the advice they provide and strengthening relationships”.
If you want to learn more about the Renters’ Rights Bill, here is some of our previous coverage:
The lowdown on the Renters’ Rights Bill – part one: What’s changing and when
The lowdown on the Renters’ Rights Bill – part two: The unintended consequences
