Opinion

Student rent: to pay private
landlords or not, that
is the vexed moral question

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Student rent: to pay private landlords or not, that is the vexed moral question

Published: 23rd April 2020
Area: Real Estate & Planning
Author(s): Martin Edwards ,

Following the decision to end face-to-face teaching, many institutions have waived accommodation fees for the summer term, representing a significant reduction in income. Whether institutions are legally obliged to do so is a moot point and there are complex arguments on both sides, which as yet, remains untested in the courts.

Decisions to waive or refund accommodation fees in any event have been made by institutions on ethical or moral grounds.  For example, there is an inextricable link between the tuition contract, the student experience and the provision of on-or near-campus accommodation, which the transfer of teaching to online media has attenuated.

Some institutions believed that in the circumstances, it was appropriate to release students from any likely continuing contractual obligations under the accommodation licence. Institutions were also genuinely concerned about students who are vulnerable to hardship; brand and reputation may also have played a part in the decision.

There is clear pressure being exerted on private landlords to follow suit, including exhortations from the NUS, supported by UUK.  Landlords are a varied group, ranging from individuals owning one house to commercial companies owning and managing large complexes of student halls of residence.  This article explores why private landlords may not wish to follow institutions’ lead and why their motives for not doing so are not entirely ignoble.

Guidance for private landlords providing rented student accommodation

Most private landlords let their properties on assured shorthold tenancies. These are the most common type of tenancy for residential lettings and are no different from the tenancies enjoyed by non-student private renters.  Considerations such as the student experience and face-to-face teaching play no part whatsoever in the contractual relationship; the cessation of campus life prevents neither party from discharging their contractual relationship.  As far as a landlord is concerned, the property remains available for occupation for the remainder of the summer term in accordance with both parties’ contractual obligations.

Can private landlords still make students pay their rent during COVID-19?

Under the Coronavirus Act 2020, if tenants refuse to pay their rent, a landlord is prevented from bringing court proceedings to evict them (on grounds of non-payment of rent) unless at least three months’ notice has been given – even where notice has been given, possession proceedings have been suspended for a period of 90 days from 27 March 2020. In reality, a landlord is unlikely to be able to evict tenants until the autumn.

In addition, even if a landlord were to voluntarily release tenants from the contract, the residential rental market is currently stagnant and the potential for re-letting is low. A landlord therefore has no effective means of mitigating their loss.

Whilst it is not the role of lawyers to opine on ethics or morality, or to assess the balance of moral responsibility in these matters, the following are reasons why a private landlord may not believe it appropriate to forgo rental income:

  • Both parties have entered into a contractual relationship in good faith and neither is prevented by circumstances from performing their obligations;
  • Some students have opted to stay in their rented houses, preferring to live with their housemates;
  • The rent is the only source of current income available to the landlord, resulting in hardship to the landlord if it is not paid;
  • The income is needed to fulfil mortgage obligations. Whilst some landlords may be able to obtain a mortgage holiday, this will not be possible for all.  Landlords considering granting a rent holiday will need to discuss their individual circumstances with the bank before doing so to avoid breaching any terms of their mortgage agreement; or
  • Corporate landlords may be funded by pension funds on whom elderly citizens depend for their incomes. Stock market movements have already damaged the value of pension funds and investment in property income would have been one of the main risk-diversification strategies deployed in response. Foregoing rental income may therefore exacerbate the problem and jeopardise future investment in student rental property

That said, landlords should consider how the decision not to forgo the rent might affect the relationship with their tenants. If tenants have agreed to rent the property for a number of years, the landlord may want to take this into account.

What are the repercussions for students not paying their rent?

If tenants are currently unable to pay, they should be having conversations with their landlord to see how best the parties can deal with the situation. Whilst the landlord may not be able to evict the tenants in the short term, the tenants may be faced with a claim for significant rent arrears if they do not reach an agreement with the landlord and decide to simply stop paying their rent.

As with most stories, there are two sides.  Not all landlords are swathed in wealth and not all students will suffer hardship.  Who decides where the moral imperative lies? Clearly there are different considerations depending on the landlord’s circumstances, and the terms of the letting, but there may be a role for government in resolving this question with input from both landlords and the sector.

Contact us

To discuss any of these issues or to consider more general commercial please contact Martin Edwards or another member of the real estate disputes team in your local office.

Shakespeare Martineau has launched a free legal helpline, with a team of experts on hand for any queries on family and private matters. We are also offering bespoke guidance on a range of other subjects, from employment and general business matters, through to director’s responsibilities, insolvency, restructuring, funding and disputes. Available from 10am-12pm Monday to Friday, call 0800 689 4064.

General advice in relation to COVID-19 can be found on our dedicated coronavirus resource hub.

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