Student landlords to get a new 'ground for possession' under the Renters (Reform) Bill

Steve Lumley·27 October 2023·6 min read
Student landlords to get a new 'ground for possession' under the Renters (Reform) Bill

The Renters (Reform) Bill is a step nearer after its second reading in Parliament was passed without a vote.

The headline feature of the Bill is that section 21 'no-fault' evictions will be abolished but a compromise to quell a backbench rebellion was reached.

The government now says that section 21 will not be abolished until the court backlog has been cleared and the court process improved to meet landlords' needs.

And the government's plan to scrap fixed term tenancies for residential properties to periodic tenancies also saw a compromise being made.

New 'ground for possession' for student landlords

The government now says it will introduce a new 'ground for possession' for student landlords to repossess a student property.

That's instead of extending the exemption from periodic tenancies that purpose-built student accommodation (PBSA) will enjoy.

In a report, the government rejected the Levelling Up Select Committee's findings from February that said making student tenancies periodic could 'push up rents or reduce the availability of student rental properties'.

The government also turned down a recommendation to keep fixed-term tenancies for the student private rented sector.

Periodic tenancies for student accommodation

Among the organisations that criticised a move to periodic tenancies for student accommodation, was the think-tank, the Higher Education Policy Institute (HEPI).

It stated that the introduction of periodic tenancies for private student homes would cause harm: "Students would no longer be able to rent a house with a group of their friends – a highlight of the student experience for many. Instead, there will be a bun fight over individual rooms in houses with strangers.”

Abolishing fixed term tenancies

However, the government guidance for the Renters (Reform) Bill makes clear that abolishing fixed term tenancies will 'provide greater security for tenants’ while retaining the important flexibility that privately rented accommodation offers.

Instead, the government says it will introduce a new ground for possession for student tenancies so that landlords can serve notice to coincide with the academic year.

Indeed, the government response to a report by the Levelling Up, Housing and Communities Committee on Reforming the Private Rented Sector says:

The government 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.

Retaining fixed terms for students, as per the committee’s recommendation, would not in itself mean properties are available at the end of an academic year for next year’s students. Unless notice is served, tenants have a right to remain in a property when a fixed term ends, and a landlord must still use a ground for possession or section 21 to evict them. We believe retaining fixed terms would unfairly lock students into contracts, meaning they could not leave if a property is poor quality, or their circumstances change. Student tenants should have the same flexibility as others.

We do not think it is viable to introduce codes which cover all student housing. There are a very large number of private rented sector student properties which would make enforcement extremely challenging, and further regulation would be a significant burden on small landlords. There are key distinctions between private housing rented to students and purpose-built student accommodation (PBSA) which warrants a different approach. PBSA is designed specifically with students in mind and caters for their needs, often with additional facilities or support services that would not be available in a standard home rented to students.

Neither students nor landlords would have certainty

By scrapping fixed term tenancies, the National Residential Landlords Association (NRLA) warned that neither students nor landlords would have certainty that properties would be available to rent when the academic year begins.

The NRLA's chief executive, Ben Beadle, said: "Following extensive campaigning by the NRLA, we welcome the approach taken by ministers to ensure court improvements are made before section 21 ends.

"The Government is also right to protect the student housing market.

"However, more is needed to ensure student landlords are treated the same as providers of purpose-built student accommodation.”

'Prefer to sign individual contracts with each student'

Simon Thompson, the managing director of Accommodation for Students, welcomed the compromise and said: "One possible outcome of the Bill is that landlords will prefer to sign individual contracts with each student in a shared house, rather than a joint one.

"This would reduce the risk of being liable for the whole rent if one of the tenants leaves or defaults. This could be a benefit for students as well."

He added: "However, the Bill still has a long way to go before it becomes law and student landlords will need to understand what the potential impact on their business will be.

"Having said that, next year is an election year so anything could happen - but at least the government appears to be listening to student landlords."

For more information:

The latest Reforming the Private Rented Sector report has more details on what is (and isn't) in the Renters (Reform) Bill.