By Martin Blakey, the former Chief Executive of the Leeds-based student housing charity Unipol. Read Martin’s previous comments on the Renters’ Rights Bill from November 2024, October 2024 and June 2024. A proposed amendment to the Bill is attached at the bottom.
Elsewhere on the site, David Lam explores, from the perspective of a widening participation student, the true value of going to university – not just in terms of career prospects, but in the friendships, experiences, and personal growth it fosters. You can read the blog here.
Background
The Renters Rights Bill passed its Report stage in the Commons on 14 January 2025. The first reading has now taken place in the House of Lords, with the second reading listed to take place on Tuesday 4th February. The stated aim of the Government is that the Bill should become law and take effect over the summer of 2025 and, at present, the Bill is on track to achieve that aim.
This is a good moment, therefore, for an update on recent developments together with a few thoughts about how the Bill has developed and been shaped.
This blog follows on from the earlier detailed HEPI blog on 9 October 2024 Renters’ Rights Bill and Student Accommodation: The Final Stretch? https://www.hepi.ac.uk/2024/10/09/renters-rights-act-and-student-accommodation-the-final-stretch/ and does not seek to cover that ground again.
As a reminder, most of the Renters’ Rights Bill will not apply to purpose build student accommodation (PBSA) where the provider is a member of the Government approved Code; PBSA providers will let their rooms on common law tenancies rather than the assured tenancies that are covered by this Bill.
Latest Developments
During the Report stage of the Bill in the Commons, a relatively small number of Government amendments were agreed upon (no non-Government amendments were agreed) and three have particular relevance to students in off-street housing on assured tenancies:
a) a new clause 14 limits the amount of rent that a landlord can require to a maximum of one month. It does so by amending Schedule 1 to the Tenant Fees Act 2019 so that any payment of rent made before a tenancy agreement is signed will be a prohibited payment. A new clause 13 amends the Housing Act 1988 to ensure that tenants continue to be protected from unreasonable requests for rent to be paid early once a tenancy has commenced. Landlords will no longer be able to include any terms in the tenancy agreement that have the effect of requiring rent to be paid prior to the rent due date.
The effect of this is that tenants can be certain that the financial outlay to secure a tenancy will not exceed the cost of a tenancy deposit and the first month’s rent.
b) A restriction has been added to repossession ground 4A (that allows landlords to recover possession of an HMO that is let to full-time students) and landlords will not be able to use the ground if the tenancy was agreed more than six months in advance of the date on which the tenant has a right to occupy the dwelling.
c) A new Clause 21 inserts sections into the Housing Act 1988 to limit a guarantor’s liability for rent following the death of a tenant. Terms of guarantee agreements that purport to hold a guarantor liable for rent in these circumstances will be unenforceable. The details are complex but, generally, this liability is removed only where a guarantor is a ‘family member’.
So, what impact will these changes have on student tenants? As is common in housing, there is a balance between the positives and negatives that these changes will bring.
a) Restricting rent in advance
Generally, this means that students will pay rent monthly to their landlord, in advance. This will have the advantage that students who previously found renting difficult because they did not have sufficient ‘up-front’ money will find renting easier. Notably, rental payments will no longer bear any relationship to when students receive their loan payments or University terms.
The downside to this change is that students, unlike most tenants in the private rented sector, rarely have a credit history and landlords sometimes see students posing a higher risk of non-payment. This is particularly the case if a student is from overseas, where debt recovery post-tenancy can be difficult, if not impossible. Up-front rent payment has, in the past, gone someway to allaying fears of non-payment.
Many landlords are likely to react to this perception of increased risk by increasing their use of guarantors (where a third party guarantees to pay the rent in the event of tenant default).
One of the key MPs seeking to restrict up-front rent payments (Alex Sobel MP for Leeds Central and Headingley, which has a large student population) realised this and also made a strong case for limiting the use of guarantors but this was rejected by the Minister who said
I appreciate fully that obtaining a guarantor can be difficult for some prospective tenants, and I understand the reasoning behind his amendment. However, I am also mindful that in some instances the use of guarantors can provide good landlords with the assurance necessary to let their properties to tenants who may otherwise find it difficult to access private rented accommodation… Having considered this issue in great detail, I ultimately concluded that limiting guarantors could inadvertently make life more difficult for certain types of renter.
Hard data on the use of guarantors is hard to come by, but their use will likely increase. This might cause problems for those with no easy access to guarantors, particularly those who have no family members or international students who have no UK-based contacts.
Another likelihood is that landlords start increasing the size of deposits to guard against the non-payment of rent. Generally, the size of deposits that students pay has been low compared to other private renters. This is probably because, at the time of renting, students are low on cash and many have already paid one deposit (for where they are currently living). Being asked to pay a larger deposit for next year’s accommodation acts as a disincentive to rent and therefore landlords have kept student deposit levels low.
Many non-student private renters are asked to pay a deposit that is the maximum allowed by the Tenant Fees Act which is capped at 5 weeks rent. Looking at the most detailed national data available in the last 2021 Unipol/NUS Accommodation cost survey, the average deposit students paid was £259 and the average weekly rent (at that time, excluding London) was £170. So in theory, student deposits could be increased to around £850. It is unlikely student deposits will rise to their maximum level, but many forecast an increase from the commonly charged £250 to £500 over the next couple of years.
On balance, the positives and the negatives probably balance each other out. Some students will benefit, others will not. Although placing limits on guarantors may have been seen as a step to far by the Government, had up-front rent payments been restricted and the use of guarantors had also been restricted, this would have been a significant win for student renters.
b) Trying to stop early renting
This new clause aims to reduce early renting. Landlords will no longer be allowed to take repossession of their property under the new ground for possession (4a) that stops students from staying outside of the academic cycle if the tenancy was agreed more than six months in advance of the date on which the tenant has a right to occupy the dwelling.
The Housing Minister, in agreeing this change, said that this would:
Act as a strong disincentive against landlords who wish to use it to pressure students into early sign-ups, as many do now.
Many in the student housing world have long been dismayed at how the student renting season has been getting earlier and earlier. Many first-year students now rent properties for their second year of study within their first 6 weeks of arriving as freshers. Anything that stops this early letting is a good thing and is to be welcomed. This change is likely to have no negative effect on the overall level of supply and demand in the student market; it simply gives students a longer time to think and will enhance their decision-making.
But this is an odd way of going about trying to stop this early letting cycle. Indeed, the Minister went on to say:
I want to be clear that the amendment will not lead to an outright ban on contracts being agreed more than six months in advance.
This is why an earlier HEPI blog said:
It is clearly daft that many students are looking for next year’s housing in November of the preceding year. There should be a ‘cooling off period’ that would allow students to withdraw unilaterally from any contract made up to four months before it begins.
So, two points here. Firstly, on timing, many student tenancies begin over the summer period (from 1July onwards), so renting could still take place in early January and ground 4a could still be used. A four month limit would have meant many students renting in March, which would have been a much better outcome.
Secondly, this is an odd way of going about trying to tackle early-renting. A legal expert in this field makes the point:
I don’t like the ‘removal of privileges’ approach to achieving policy objectives. It would be clearer all round if they either ‘banned’ signing up more than 6 months in advance, or gave people cancellation rights. That way, landlords and tenants have more chance of understanding what they are doing. With this approach, I can see students signing up early as always, then realising that Ground 4A can’t be used and staying put. The people who will lose out are the intending tenants of the following year, who are unlikely to have made any enquiry before booking as to whether or not the landlord will be able to give possession.
This change, if it has the effect of slowing down early-renting, is to be welcomed but it is a bit half-hearted and may have less impact than hoped for.
c) Limiting a guarantor’s liability for rent following the death of a tenant
This change followed a number of examples given by MPs of landlords heartlessly chasing guarantors for payment following the death of a tenant. The new clause aiming to stop this is, however, limited to family members. As the Minister put it:
I should make it clear that if in a joint tenancy the guarantor is not a family member, their liability for rent will be maintained….Our new clause strikes the right balance: guarantors will be protected from being held liable for rent when they are grieving; landlords will be able to reclaim costs owed prior to a tenant’s death; and guarantor’s liability for other costs incurred under the tenancy will not be affected.
This approach gives rise to several pages of detail in the Bill, not least because it has to define ‘family member’ and then goes into considerable detail about what happens when the guarantee affects joint tenants (as many student renters are). These additional clauses bear all the hallmarks of a rushed and ill-thought-through change. The definition of ‘family member’ for guarantor purposes, for example, is different from another definition in the same Bill of ‘family member’ relating to tenancy succession.
Again, all a bit half-hearted and unnecessarily complex. What was wrong with saying, once a tenant dies, their guarantor arrangement dies with them? For students, this change will have little effect unless, at the point the tenant dies, a guarantor is a family member and those within joint tenancy arrangements have restricted the scope of their guarantor payment to a fixed sum of rent (otherwise unpaid rent is a joint liability to be borne by other tenants or their guarantors).
Students and the Report Stage
Students were mentioned frequently in the debate, often by MPs with significant numbers of students living in their constituency. Generally, they confined their comments to amendments and had, no doubt, been told that this was not the place for revisiting matters that had already been considered during the second reading stage.
Several MPs raised the issue of affordability in rented housing, both for students and other renters and there was frequent referencing of whether rent controls should be used, or ‘rent stabilisation’ that some MPs suggested should ensure that rents should rise by no more than annual earnings or CPI. The Minister, Matthew Pennycook, went out of his way in his summing up speech to reject the possibility of rent controls:
The Liberal Democrat spokesman, the hon. Member for Taunton and Wellington, along with my hon. Friend the Member for Liverpool Wavertree (Paula Barker) and the hon. Member for Bristol Central (Carla Denyer), spoke in support of their respective amendments to introduce forms of rent control.
However, as we debated extensively in Committee, the Government sincerely believe that the introduction of rent controls in the private rented sector could harm tenants as well as landlords by reducing supply and discouraging investment. While I fully appreciate that there is a broad spectrum of regulation that falls under the title of rent control, there is, as we debated at length in Committee, sufficient international evidence from countries such as Sweden and Germany, cities such as San Francisco and Ontario, and the Scottish experience since 2017, to attest to the potential detrimental impacts of rent control.
An amendment to extend ground 4a to all properties occupied by students failed. Readers will recall that ground 4a allows a landlord, with prior notification to tenants, to repossess a property in order that it can be let to future groups of students. After a considerable amount of lobbying by both educational sector bodies and landlords, the Government responded that it:
…recognises that the student market is cyclical – and that removing section 21 will mean landlords cannot guarantee possession each year for a new set of tenants.
Having engaged across the sector, we understand the cyclical model is critical for landlords’ business models and ensures a timely and robust supply of student accommodation. We will therefore introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies. This will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year.
But this right to repossess only applies to Houses in Multiple Occupation (HMOs) and it does not apply to one- and two-bedroomed properties.
The suspicion is that the Government assumed non-HMO properties housed only a small number of students and any such reduction in supply would be fairly marginal. This is a significant miscalculation.
Data provided by the Accommodation for Students website (the largest search engine for student off-street properties) showed that 31% of the off-street properties on their website were not HMOs and were listed as showing 1 or 2 beds for rent. There were significant regional variations behind this average, which reflected the different housing stock in different areas. In Newcastle upon Tyne, 54% of student-advertised properties were non-HMOs, in Preston this was 50% and in Nottingham 40%.
These figures show that these smaller properties form a significant minority of the supply and, in many student cities, this kind of smaller property is a key part of the student accommodation supply. These areas, with many non-HMO student properties, are still vulnerable to stock moving into the non-student lettings market.
Purpose Build Student Accommodation
Work is now taking place by the Ministry of Housing, Communities and Local Government (MHCLG) to establish the mechanism whereby PBSA providers will become ‘specified’ under the 1988 Housing Act, taking them outside the remit of much of the Renters Rights Act. There was some speculation about whether the new Decent Homes Standard (DHS) would apply to PBSA, but that has now been clarified. In response to a parliamentary question on 19 December 2024, the Housing Minister, Matthew Pennycook said
The Bill will exempt Purpose Built Student Accommodation (PBSA) from the assured tenancy system if the landlord is signed up to a government approved code of management practice. Such accommodation will therefore not be subject to the DHS, but landlords will need to meet rigorous standards set by the codes which are tailored to the needs of PBSA….Failure to meet these standards will result in membership being terminated, meaning the property will then be subject to the DHS.
The Government-approved Code for the private sector is currently being reviewed by its operator Unipol and, as was reported earlier, is likely to include provisions to ensure:
- the continued protection of deposits using a Government-approved deposit protection scheme and using that adjudication process to resolve any disputes;
- improved flexibility for students either leaving their institution of study or not gaining a place to study, giving them a right to leave their agreement having given a period of notice. An initial draft of the Code gives the notice period as 8 weeks, but there is a view that this could be shortened to 4 weeks without adversely affecting suppliers;
- that in the event of the death of a tenant, any guarantor agreement will not be proceeded with or enforced;
- that the Code now references the Building Safety Act, the Fire Safety Act and tighter guidance on how to respond to damp and mould; and
- that in handling complaints, timescales have been tightened and Code Members have been given a clearer pathway to ensure they respond promptly to students complaining.
These inclusions in the Code are designed to protect and improve students’ rights in renting PBSA. These proposed changes are subject to both a sector and public consultation period (likely to take place across March and April 2025).
Will anything change in the Lords?
The suspicion is that there will be few major changes made but, for students, two amendments suggest themselves from what has been reported earlier:
The first is that, in order to maintain properties in the student sector, ground 4a should apply to all properties occupied by students, not just HMOs.
The second would be to shorten the time span of 6 months to 4 months, which would allow landlords to recover possession if the house is let to full-time students. This would mean, if the Government’s view that this will discourage early renting is correct, that house-hunting would take place in March, just before Easter.
Conclusion
The Renters Rights Act seeks to rebalance the rights between tenants and landlords and the changes it brings about will have different effects on different sub-sectors of the rental market.
In many areas within the Bill, policymakers wanted all renters to have the same rights with a view to improving the security of tenure for the vast majority of rented tenants and ending no fault evictions. But treating students differently does not imply that they are ‘second-class citizens’; instead, it recognises the important links between good housing supply, on the one hand, and standards and academic achievement on the other. It remains important that student housing does not suffer from collateral damage as additional protections are added to the rest of the private rented sector for longer-term renters.
Many have speculated on what shifts in the availability of student off-street properties will take place, but it is important to stress that no one actually knows what will happen. The first real indications will be seen towards the end of this year, as current first-year undergraduates start looking for their housing for 2026-2027.
