Purpose-Built Student Accommodation (PBSA) is increasingly being developed in city centres up and down the UK to meet the growing demand from the student population.
PBSA offers tailored living spaces designed to meet student needs, with flexible options such as shared apartments or studio living. However, the upcoming Renters’ Reform Bill could significantly affect this sector, particularly for those landlords issuing assured shorthold tenancy agreements (ASTs) under the Housing Act 1988.
If enacted in its current form, the Renters’ Reform Bill could bring sweeping changes to PBSA operations. Here’s what businesses managing PBSA need to know.
A Shift to Rolling Tenancies
The proposed Bill aims to amend the Housing Act 1988 by converting all tenancies into rolling or “periodic” tenancies. Unlike the current system, where a tenancy starts with a fixed term and then rolls over, the rights of both parties under the new system will remain consistent throughout the tenancy. Importantly, tenants will be able to end their tenancy with just two months’ notice at any point.
For PBSA landlords, this provision poses a risk of increased void periods, particularly if students opt to vacate mid-academic year. The introduction of periodic tenancies also underscores the importance of having guarantors, who would be responsible for covering any outstanding rent if a tenant decides to leave before the end of the academic term.
Changes to Termination Notices: Abolishing Section 21
Currently, landlords of assured shorthold tenancies can use two main types of notices to end tenancies:
Section 21 (often referred to as a “no-fault eviction”) allows landlords to terminate the tenancy with two months’ notice without providing a reason.
Section 8 enables landlords to seek possession due to specific grounds such as rent arrears or anti-social behaviour.
The Renters’ Reform Bill proposes to abolish Section 21, meaning landlords will need to provide a valid reason under Section 8 to end a tenancy. The grounds for possession under Section 8 will also be expanded. For example, while the current law allows for eviction after two months of rent arrears, the Bill suggests increasing this threshold to three months.
Additionally, the notice period for many of these grounds will be extended, which could add further delays for PBSA landlords seeking possession.
What About Existing Tenancies?
The government plans for the new rules to apply to both existing and new tenancies from the same date, although the exact implementation date is yet to be confirmed. It is anticipated that the changes will come into effect in the summer of 2025 at the earliest.
Once the Bill becomes law, the following changes will apply:
New tenancies: All new agreements will automatically become periodic tenancies, and landlords will no longer be able to use Section 21 notices.
Existing tenancies: Landlords will still be able to rely on Section 21 for tenancies established before the law comes into effect. However, any possession proceedings must be initiated within six months of serving the notice, or within three months of the new rules taking effect, whichever is earlier.
The Introduction of Ground 4A for Student Accommodation
To address the specific needs of student housing, the Bill introduces a new ground for possession known as Ground 4A. This ground applies to properties let to full-time students, allowing landlords to regain possession between 1 June and 30 September, provided the landlord intends to re-let the property to new full-time students.
However, there’s a caveat: Ground 4A only applies to Houses in Multiple Occupation (HMOs) or dwelling-houses within HMOs. As most PBSA properties are not classified as HMOs, this ground is unlikely to benefit PBSA landlords directly. Instead, it is more relevant to landlords managing off-street student accommodation in shared houses.
A Possible Exemption for PBSA Providers?
There is some indication that PBSA may be exempt from aspects of the Renters’ Reform Bill. According to the explanatory notes accompanying the Bill, PBSA providers registered under government-approved codes may not be subject to the same changes. The notes suggest that PBSA lettings will continue to be governed by the Protection from Eviction Act 1977 and could exempt them from the assured tenancy regime.
An article published by the Higher Education Policy Institute (HEPI) on 9 October 2024, referenced the Bill team as stating: “It was always our intention to exempt private PBSA… from the assured tenancy regime.” This would mean that PBSA tenancies would be classed as common law tenancies, allowing landlords to continue offering fixed-term agreements. Under this regime, grounds for possession would be determined by the contractual agreement between landlord and tenant, rather than the Renters’ Rights Bill.
What Should PBSA Providers do Next?
For PBSA providers already advertising properties for the 2025 academic year, the advice is to hold off on making changes to current tenancy agreements until more clarity is provided. The government’s position on PBSA exemptions is still being clarified, and further amendments to the Bill are expected as it progresses through Parliament.
In the meantime, PBSA landlords should keep a close eye on the Bill’s progress and consider serving any necessary Section 21 notices before the new rules take effect, likely by spring 2025. This could help maintain flexibility and mitigate any potential disruption caused by the new regulations.
If you need guidance on how the Renters’ Reform Bill could impact your business, our legal team is here to help. Contact us for advice on navigating the evolving legislative landscape surrounding student accommodation.
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Gary is a social housing specialist who engages with all stakeholders to ensure landlords and property managers achieve their goals for their housing stock.
As head of the social housing litigation team, Gary has a reputation for finding solutions to disputes in a speedy and efficient manner. He has a particular expertise in leasehold, shared ownership and Affordable housing.
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