Renters' Rights Bill

Written evidence submitted by Unipol Student Homes (RRB09)

Renters’ Rights Bill Committee Submission

This submission accompanies the oral evidence from Victoria Tolmie-Loverseed, Deputy Chief Executive, Unipol Student Homes.

Executive Summary

1. Unipol has made a number of representations about this Bill and its forerunner (the Renters Reform Bill), often in collaboration with higher educational sector bodies and universities and supports strengthened protection for tenants renting in the private sector.

2. Unipol sees student housing through the lens of students undertaking a course of study or research at an institution of higher education with good quality, affordable and available housing enabling students to study effectively.

3. These reforms are well-intentioned by those who campaigned for them, but that does not mean all tenants will be benefit equally from these changes and student renters could suffer as ‘collateral damage’. On balance, Unipol feels that the short-term gains brought about by aspects of this tenure reform for many student renters is likely to be offset by a number of greater negatives.

4. Unipol would like to see Ground 4a extended to apply to all properties occupied by students not just HMOs.

5. Under the Bill all assured tenants will be able to give two months’ notice to leave their tenancy at any stage. As the vast majority of student housing is covered by licensing under the Housing Act 2004 students being able to ‘vote with their feet’ will either have little or no effect on their housing standards.

6. Student rents are mainly based on an annual rent. If giving notice early becomes commonplace then rents will rise to cover an anticipated shorter letting period and landlords may change their letting cycle so that the opening month of a letting is June (rather than the more common July) so that any notice taking effect towards the end of the academic year is taken into account.

7. Around 50% of student tenants renting in off-street housing are joint tenants. If any one of the individuals comprising the joint tenancy gives notice to quit the whole joint tenancy ends. There is no need for consensus among the joint tenants.

8. There is an increasing shortfall of affordable student housing available as student numbers continue to expand and currently the supply of student accommodation is falling. Estimates vary as to how great the accommodation bed space shortfall will be but a middling estimate from CBRE is 620,000 by 2029

9. Landlords should retain the ability to issue fixed term tenancy agreements of up to 12 months to ensure consistency of rental income and ensure the ongoing supply of housing linked to the academic cycle. This fixed term tenancy would stipulate a minimum period of occupancy, not a maximum period and the new ground 4a could still apply after the fixed term has ended. In respect of a fixed term the following student-specific conditions should apply:

· A "cooling-off" period would apply that would enable students to unilaterally cancel any tenancy signed up to 4 months before the tenancy began. This would effectively curb early renting.

· There should be a ban on requiring rental guarantors on fixed term tenancies, which can negatively impact care leavers, estranged students and international students.

· Students should be able to give two months’ notice within any fixed term period if they are unable to attend their institution of study or they leave their educational institution midway through an academic year.

Further details are given below.

Background

10. Unipol is a specialist student housing charity, established in 1975 by the University of Leeds and Leeds Beckett University. Its mission is to make student housing better. Since then it has expanded and now operates two of the government approved codes under the Housing Act 2004 covering over 400,000 tenants in purpose-built student accommodation (PBSA) throughout the UK. Unipol also provides sector training, student advice, research and is also a not-for-profit landlord to 3,500 students.

11. Unipol has made a number of representations about this bill and its forerunner (the Renters Reform Bill), often in collaboration with higher educational sector bodies and universities.

Introduction

12. Unipol welcomes the Renters Rights Bill to the legislative agenda and supports strengthened protection for tenants renting in the private sector.

13. Unipol sees student housing through the lens of students undertaking a course of study or research at an institution of higher education. Good quality, affordable and available housing enables students to study effectively at a university of their choice and to undertake specialist courses only available at selected institutions. Most students wish to live near their university during their period of study and, as many are living away from home for the first time, student housing has become a distinct sub-sector within the more general private rented sector.

14. No one knows what will happen after the bill takes effect but it could be that the gainers from the reforms proposed will be longer-term family and professional renters who make up a significant part of the rented market but that student renters could become ‘collateral damage’. These reforms are well-intentioned by those who campaigned for them, but that does not mean all tenants will be benefit equally from these changes.

Where students live

15. The latest data from the Higher Education Statistical Authority (HESA) shows that in 2022-23 there were 2,356,915 students studying in the UK.

16. 54% (1,265,170) lived in some form of rented housing with 31% (731,790) living in off-street housing that will be directly affected by this bill and 23% (533,380) live in purpose built accommodation. https://www.hesa.ac.uk/data-and-analysis/students/chart-4

17. Off-street housing provides rents are lower and more affordable than purpose built accommodation averaging £130 per week nationally compared to £190 per week in PBSA.

Repossession Ground 4a

18. In making representations about tenure reform Unipol, and other educational sector bodies, have stressed the importance of housing supply being available to students in line with the academic year. The proposed new ground for possession 4a, has recognised that student housing supply is important but there remains an issue that this ground only applies to Houses in Multiple Occupation (HMOs), so houses and flats with fewer than three student occupants will not carry this right.

19. It is difficult to follow the logic of this. If the argument is that couples and sharing partners, having been students, are more likely to want to remain in the property after graduation then the fact that those ex-students can remain will simply see these smaller properties leave the student market. Whenever one, or both occupants leave, most likely mid-year, then the property will simply be re-let in the general marketplace and is likely to go to professional renters. These smaller properties are likely to move outside the academic letting cycle and will be lost for future student occupancy. These smaller properties house significant numbers of students, making up 31% of properties listed on the national advertising portal Accommodation for Students. Unipol would like to see Ground 4a extended to apply to all properties occupied by students.

Two Months’ Notice Period

20. Under the Bill all assured tenants will be able to give two months’ notice to leave their tenancy at any stage and the bill guide makes clear the government’s reasoning for this change: "All tenancies will be periodic, with tenants able to stay in their home until they decide to end the tenancy by giving 2 months’ notice. This will end the injustice of tenants being trapped paying rent for substandard properties and offer more flexibility to both parties to respond to changing circumstances."

21. The effectiveness of this market-driven pressure will partly depend on housing supply: if supply is tight, or exams are looming, then moving may not be a realistic option. Most students live in houses of multiple occupation (HMOs) and the vast majority of these are covered by licensing under the Housing Act 2004 where local authority licencing is supposed to ensure that those houses meet local authority standards (including maximum occupancy levels and that inspections are carried out to ensure compliance) so, in theory, students being able to ‘vote with their feet’ will either have little effect on standards or will show that licensing is not working properly in improving and maintaining the standards it was meant to.

22. It is difficult to predict how many students will seek to give notice during the academic year, but it is important to remember that student rents are mainly based on an annual rent because, between student lets, the property remains empty generating no income (and an empty property will then attract Council Tax). If ‘leaving early’ becomes commonplace then two outcomes can be foreseen:

· Rents will rise to cover an anticipated shorter letting period. This increased weekly rent across a shorter letting period will not affect the cost of accommodation for those seeking to leave their accommodation early than they do now, but it may end up costing around 50% of students who want to stay longer (postgraduates and those with part time jobs) more because their weekly rent will have risen.

· Landlords may change their letting cycle so that the opening month of a letting is June (rather than the more common July) so that any notice taking effect towards the end of the academic year is taken into account. If a student says ‘why should I pay rent on this property in May when I only want to live in it later in the year?’ the answer may well be ‘because otherwise I am not letting it to you.’

Joint tenancies

23. Around 50% of student tenants renting in off-street housing are joint tenants. Joint tenants are treated not as individuals but as a single indivisible body. Effectively, there is one tenant – it just happens to comprise several individuals. If any one of the individuals comprising the joint tenancy gives notice to quit the whole joint tenancy ends. There is no need for consensus among the joint tenants.

24. Under the tenure proposed by the Bill, if a joint tenant ends the tenancy early and the landlord can re-rent the whole house, then the landlord may confirm the ending of the tenancy at that point – or the landlord can talk to the existing tenants and work out a financial settlement in order that the other parties can stay. In any event, anyone ‘staying’ will need to sign a new contract as the previous tenancy will have ended. But an assumption is being made that all the students can be got into a room (virtually or actually) to discuss properly what should happen – that can be more difficult than some may think. Secondly, the approach is likely to vary depending on how high tenant demand is in a given area for rented accommodation.

Monthly Rent

25. The Bill provides for rent to be paid monthly. Many undergraduate students rely on their maintenance loan, which is paid in three instalments, to pay their rent and landlords often time their rental periods to coincide with this cycle, accepting the balance between rent in arrears and rent in advance. A move to monthly rent periods will mean students have to pay rent monthly, regardless of loan payments. Many landlords will see shorter rent payments as raising their risk of arrears and may seek to increase the use of larger deposits and guarantors.

Supply

26. The provision of adequate off-street housing is crucial in ensuring an affordable base of student housing, as rents across the sector continue to rise, particularly in areas of accommodation shortage. https://www.hepi.ac.uk/2023/10/26/student-accommodation-costs-across-10-cities-in-the-uk/

27. There is an increasing shortfall of affordable student housing available as student numbers in many towns and cities continues to expand. In most parts of the country off-street bed spaces cannot grow because of planning restrictions on HMOs and the delivery of new PBSA bed spaces (at only 8,000 beds in summer 2024) is already less than student growth: in reality the supply of student accommodation is falling as demand for it is increasing.

28. UCAS predicts a million applications to higher education by 2030 and any decline in supply could significantly put at risk the widening participation agenda of higher education, with many students from across all socio-economic backgrounds having their freedom to choose a study destination limited, or restricted completely, by a lack of affordable places to live. Estimates vary as to how great the accommodation shortfall will be but a middling estimate from CBRE is 620,000 bed spaces https://www.cbre.co.uk/insights/articles/crisis-or-opportunity-the-uk-student-housing-shortage#:~:text=The%20UK%20student%20housing%20shortage,-July%204%2C%202024&text=Now%20that%20A%20levels%20exams,but%20location%20is%20also%20key.

29. There is also the basic macro-economic perspective that being a property owner is a commercial investment and that the greater the risk in investment, the higher the expectation of a return. Increased perception of risk, and how that might manifest itself, may be enough to see rents rise, particularly in the student sector where part of the annual renting cycle is now open to unknown levels of change.

30. On balance, Unipol feels that the short-term gains brought about by aspects of this tenure reform for many student renters is likely to be offset by a number of greater negatives.

Suggestions for further change

31. The Government should publish a more refined impact assessment exploring the educational impacts of the Bill, rather than just looking at the private rented sector as a whole.

32. Landlords should retain the ability to issue fixed term tenancy agreements of up to 12 months which would ensure consistency of rental income and ensure the ongoing supply of housing linked to the academic cycle. This fixed term tenancy would stipulate a minimum period of occupancy, not a maximum period and the new ground 4a could still apply after the fixed term has ended. In respect of a fixed term the following student-specific conditions should apply:

· 33. A "cooling-off" period would apply that would enable students to unilaterally cancel any tenancy signed up to 4 months before the tenancy began. This would effectively curb early renting.

· 34. There should be a ban on requiring rental guarantors on fixed term tenancies, which can negatively impact care leavers, estranged students and international students.

· 35. Students should be able to give two months’ notice within any fixed term period if they are unable to attend their institution of study or they leave their educational institution midway through an academic year.

ends.

18 October 2024