Renters' Rights Bill

Written evidence submitted by Peter Mercer to The Renters’ Rights Public Bill Committee (RRB95).

Re: Renters’ Rights Bill 2024

I have been renting properties to students in the city of Lancaster for nearly twenty years. I am writing to you to express my concerns with regards to the proposed Renters’ Rights Bill that is currently in the process of passing through parliament, especially with regards to the impact it will have on the student accommodation sector. Whilst I am fully supportive of any legislation that aims to improve standards and protect individuals from exploitation, I feel that the current bill fails to take into account the subtle differences that exist across the rental sector.

Fixed Term Tenancies

I can understand why the government may wish to provide renters with a greater level of freedom, but I feel that abolishing fixed term tenancies for student accommodation is a mistake and would cause widespread issues. The very nature of student accommodation means that it is of a temporary nature, a place to stay for a fixed period whilst undertaking further education. Fixed term contracts have always worked well for student accommodation, providing tenants with accommodation for a fixed price for a set period, whilst providing landlords with sufficient financial security to enable them to offer attractive ‘all inclusive’ packages. The abolition of fixed term contracts would make it very difficult for landlords to offer inclusive services such as utility bills, broadband, TV licences, contents insurance and monthly cleaning as these cannot be easily switched on and off should the tenant(s) decide to serve notice before the end of the academic year. Furthermore, rent is often calculated on the basis that a tenant(s) remains in a property for a fixed period making it easier to distribute the costs of these services equally over the full term of the tenancy. These inclusive packages are not commonly offered in the wider rental market therefore landlords in other sectors are not exposed to the same level of financial risk should a tenant decide to leave.

Due to the cyclic nature of student accommodation, lettings are typically agreed between October and March for the following academic year. Therefore, if a tenant(s) were to serve a landlord notice once the tenancy has commenced the chances of finding a replacement tenant(s) would be slim due to the very small pool of students looking for accommodation. This would put student landlords at an increased risk of experiencing sustained rental voids in comparison to landlords renting to single households where there is a consistent demand throughout the year. I therefore feel that student accommodation providers will be exposed to an unfair level of risk.

Changes to Rent Payments

I have concerns about the proposals to limit rent payments to one month in advance. Whilst this would appear sensible for the mainstream market where most tenants are receiving income monthly, it will cause widespread issues for student accommodation providers and tenants. Most tenants rely on their student loans to pay their rent, which is currently paid in October, January and April, landlords therefore typically request rent is paid in three termly instalments to align with these dates. Students I have spoken to like this arrangement as paying their rent in advance means they know exactly how much money they have left for food, entertainment, etc. If students are forced to pay monthly, they will be required to undertake far more detailed budgeting to ensure that enough of their loan is saved to cover subsequent rent payments, this is likely to impose unnecessary stress on students, leading to potential rent arrears if budgeting is not carefully manged. In addition, most international students are unable to provide UK based guarantor’s and therefore typically pay their rent upfront. If this is no longer allowed, then they will struggle to arrange accommodation.

PBSA Exemption

I feel that it is important for the government to clarify its position with regards to PBSA. The Renters’ Rights Bill Explanatory Notes (Paragraph 12) currently states:

‘Purpose-Built Student Accommodation (PBSA) will be exempt from these changes as long as the provider is registered for government-approved codes, since these tenancies are not assured. Lettings by PBSA landlords will be governed by the Protection from Eviction Act 1977’

Based on this statement I would like to ask how the government intends to treat smaller PBSA providers whose developments may not meet the existing minimum bedspace requirements (15 students in one development) to be considered eligible for registration to one of the government-approved codes? I feel that all PBSA providers should be treated equally irrespective of size, otherwise smaller providers face being unfairly impacted.

By way of an example, I currently own two separate buildings in Lancaster city centre, both of which I have converted into dedicated student accommodation consisting of four studio flats in each. Neither of these developments would currently meet the requirements to be considered eligible for registration for one of the government-approved codes, despite planning approval restricting their use to students in full time education.

One way to address this issue would be widen the scope of the approved codes to cover all PBSA providers irrespective of size, or alternatively to put in place approval schemes managed by local authorities.

Conclusions

If amendments are not made to the current bill, I fear rents in the student accommodation sector will increase as landlords look to protect themselves from potential voids, an increased risk of arrears and rising administrative costs, passing a greater financial burden onto students at a time when they are already struggling with the rising cost of higher education. I also believe that a growing number of landlords will look to exit the student market, leaving a significant void that it will be impossible to fill. I feel it is important that landlords are provided with some protections as part of the proposed legislation, otherwise there is a real risk that the key aims will be undermined.

It is my own belief that the best way to reform the student accommodation sector is through enhanced regulation rather than through changes to existing contractual arrangements. As an example, it would make sense for all student accommodation to be licenced by the local authority, irrespective of size, currently only larger multi household properties require such licencing. Mandatory membership to an accreditation scheme could also be included, in Lancaster we have an excellent scheme, ‘Lancaster University Homes’, which is run by Lancaster University and backed by Lancaster City Council. This scheme ensures that local students have access to well-maintained accommodation managed by accredited landlords and agents.

I hope that the points raised in this letter can be taken into serious consideration to ensure that the bill has a positive impact for all stakeholders.

November 2024.