The Renters’ Rights Bill, which recently passed its third reading in Parliament, represents one of the most significant shifts in the UK rental market in recent years. Designed to enhance security and affordability for renters, the Bill introduces new rules that will impact landlords, tenants, and the broader housing market.

For those of us in the Purpose-Built Student Accommodation (PBSA) sector, it’s essential to understand these changes and how they could reshape student housing. Here’s what the Bill entails and what it means for PBSA providers.

Key Reforms of the Renters’ Rights Bill

• Abolition of Section 21 ‘No-Fault’ Evictions:
  Landlords will no longer be able to end tenancies without valid grounds. This reform aims to improve tenant security but may lead to fewer landlords participating in the rental market, particularly in student Houses in Multiple Occupation (HMOs).
• Mandatory Rolling Contracts:
  The Bill replaces fixed-term tenancies with periodic contracts. While this increases flexibility for tenants, it could disrupt the academic rental cycle traditionally relied upon in student housing, particularly HMOs.
• Limits on Upfront Rent Payments:
  A cap on requiring more than one month’s rent in advance seeks to reduce financial pressure on tenants. However, it may unintentionally make it harder for international students or those without guarantors to secure accommodation.
• Notice Period Changes:
  Under the new bill, tenants will be required to give two months’ notice to end a tenancy, doubling the current one-month notice period. This adds greater certainty for landlords and PBSA operators but could prolong vacancy periods between tenancies.
• Higher Civil Penalties:
  The penalties for breaches of tenancy laws will increase significantly, rising from £7,000 to £40,000. This reinforces the need for compliance with legislation and operational best practices.
• Private Rented Sector (PRS) Ombudsman:
  A new PRS Ombudsman will be introduced, requiring landlords to register, even if their properties are managed by an agent or third party. This move is designed to improve accountability and tenant rights.
• Decent Homes Standard for PRS:
  The introduction of a Decent Homes Standard to the PRS will bring significant improvements, ensuring all rental homes meet a minimum standard. For PBSA providers, this is a positive step that could help drive consistent quality across the sector.

Implications for PBSA vs HMOs

The reforms are expected to affect HMOs more significantly than PBSA:

• Student Ground for Possession:
  HMOs will face stricter requirements for regaining possession of properties, including mandatory notice prior to re-letting and ensuring tenancy agreements are finalised less than six months before tenants move in. These changes could disrupt the traditional model of agreeing tenancies well in advance of the academic year.
• Disruption to HMOs:
  Many student HMOs operate on fixed-term contracts aligned with academic calendars. The shift to rolling contracts could increase turnover challenges and vacancy risks, leading some landlords to exit the market altogether.
• Opportunities for PBSA:
  PBSA providers are likely to remain exempt from the periodic tenancy rules, preserving fixed-term contracts that ensure smooth occupancy transitions in line with university schedules. This gives PBSA a competitive edge, particularly in cities with dense HMO markets.
• Affordability Challenges:
  The potential reduction in HMO supply could push more students toward PBSA, but this might widen the affordability gap, raising concerns about equitable access to housing. Providers must address this by balancing premium offerings with affordability initiatives.

Opportunities for PBSA Providers

Higher Occupancy Rates:
With fewer landlords operating in the HMO market, PBSA providers could benefit from increased demand, particularly in major university cities like Manchester, Leeds, and Liverpool.

Focus on Value Beyond Housing:
Offering additional services, such as wellbeing initiatives or sustainability programs, can enhance the appeal of PBSA and justify costs.

Strengthened Partnerships:
Collaborations with universities and local councils can help address housing shortages, ensuring students have access to safe, well-managed accommodation.

Looking Ahead

The Renters’ Rights Bill is set to move to the House of Lords for further discussion, with Royal Assent expected by Spring 2025 and implementation anticipated by Autumn 2025.

For PBSA providers, this legislative change presents both challenges and opportunities. While HMOs may face significant disruption, PBSA has the chance to position itself as the solution for secure, high-quality, and well-managed student housing.

At Derwent fm, we’re committed to adapting to these changes and continuing to provide sustainable, student-first accommodation that meets the evolving needs of students and the wider rental market.

Author: Amy Daniels, Marketing Executive