End of Term: How a ban on fixed term tenancies could affect the student rental market.

Moving into a shared house is a rite of passage for thousands of students, with multi-bed properties up and down the country seeing a steady stream of students, year on year.

Landlords too have been enjoying the fruits of the student rental market in recent years, as not only has demand for these types of properties far outstretched supply, the assets also typically provide a higher than average rental yield.

And, as they are usually only on a 12 month fixed term contract, any issues with a particular set of tenants, such as noise complaints or late rent payment, are typically short lived or covered by a deposit.

But, with the impending introduction of the long-delayed Renter’s Reform Bill, expected in late 2024, that could all be about to change. As well as the headline grabbing abolishment of Section 21 orders, the Bill also looks set to ban fixed-term tenancies, which means that all tenancy agreements in the UK will become rolling weekly or monthly contracts with no fixed end date.

Tenants would also be given more protection under the proposed Renter’s Reform Bill changes so that they can’t be evicted unfairly, through section 21 ‘no-fault’ evictions, and allowing them to give their landlord a two-month notice if they want to end the tenancy.

What could this mean for students?

Firstly, the Renter’s Reform Bill does promise to make renting any property better for all tenants. For example, rental properties will have to adhere to a set of living standards that will raise the quality of living conditions across the sector. Additionally, landlords will only be able to increase rent once a year and will be required to give renters two-months’ notice in advance.

It also means that students can theoretically stay in the same rented property for the duration of their studies, instead of being forced to switch houses at the start of every year. This could be ideal for students looking to establish a permanent base, especially for overseas students, those studying longer courses like Medicine or Law and students looking to live in the area after they graduate.

Additionally, students can take advantage of the two-month notice period to end their tenancy earlier. This could be due to housemates dropping out of their courses, causing the rent to become unaffordable or if they finish the student year earlier.

The added implications could lead to even fewer rental properties being available for students as some landlords will simply choose to leave the profession or cater for a different audience. This will limit choice, exacerbating the current student accommodation shortage throughout the UK, and will potentially push up rents in the sector due to demand.

What could this mean for landlords?

Landlords will not be able to guarantee their rental income as the tenants have a lot more flexibility over when to vacate the property.

Firstly, this could lead to more periods where the property may be empty and will not generate income, such as if students leave mid-year. Although demand for student housing is exceptionally high, it may be more difficult to fill an empty property during the academic year as most living arrangements will already be set.

Alternatively, some landlords may find that tenants stay in the property past the end of their course or acedemic year. Whilst this does guarantee income during these months, it may be difficult for the landlord to predict whether they need to get new tenants for the next academic year, show potential tenants around the property and complete any required maintenance, in line with the new living standards proposed in the Bill, before new tenants are due to move in.

This shouldn’t deter landlords as the demand for student rental properties is still very high, ensuring that rental yields will stay strong, even with the unpredictability caused by not having a fixed end date to the tenancy.

What could happen between now and the Renter’s Reform Bill being passed?

Although many expect the Renter’s Reform Bill to be passed in late 2024, there are still some hurdles that it will need to overcome before it can become law.

When the Renter’s Reform Bill was discussed in The Commons in November 2023, Housing Secretary Michael Gove made it clear that the abolition of Section 21 ‘no fault’ evictions would need to be delayed indefinitely to accommodate for wide ranging changes to the court system, designed to help speed up the process of evicting ‘at fault’ tenants.

In addition, landlords have been lobbying for the changes to fixed term agreements to be modified when it comes to student lets, arguing that the sector would be ‘decimated’ if the proposed bill went ahead as planned. The National Residential Landlords Association (NRLA) proposes that the government add a provision to the bill that would allow landlords with student lets to end a tenancy in line with the academic year.

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