According to The National Residential Landlords Association (NRLA), the recently proposed Renters Reform Bill is set to cause “chaos” in the student rental market.
The Bill is set to abolish fixed-term tenancies, replacing them with rolling tenancies with no fixed term date, which would mean a loss of income for landlords. David Hannah, Chairman of Cornerstone Group International, discusses what the broader implication of the bill could mean for the student rental market.
Student landlords have often offered a 12-month fixed-term contract to match the academic year and ensure properties are not left empty outside of term time.
However, the new bill’s flexibility could mean tenants would be entitled to a 2-month notice period. In turn, this would mean that if a student chose to move out early, a room could be empty for several months until the start of the next academic year, leading to an exponential loss of income for the landlord. According to the National Student Accommodation Survey an average room in a student property is let out for £535 per month.
The rental market has already experienced an exodus of buy-to-let landlords and it’s predicted that over a third of a million landlords may quit the rental market due to the proposed Renters Reform Bill according to Landlord Today. This comes as new data from Cornerstone Tax found that just 1-in-5 landlords say their investment has been a successful one.
The student rental market has already begun to witness a lack of stock becoming a growing issue. The University of York and the University of Bristol have housed students in neighbouring towns and cities, the University of Edinburgh has converted common rooms into dorms with bunk beds, and the University of Glasgow has housed students in hotels.
Meanwhile, students in Durham queued overnight outside lettings agents to secure accommodation. Hannah points out that if landlords continue to leave the student rental market, student accommodation companies unaffected by the proposed bill may fail to meet the demand.
David Hannah, Chairman at Cornerstone Group International, spoke of the implications of the Rental Reform Bill on the student rental market.
Hannah said, “The introduction of the Renters’ Reform Bill has been a long time coming and I think an important measure to add to the rental market.
“Renters are facing record rents all across the UK with affordability still being the main obstacle for people looking to buy a property – forcing more individuals to rent for longer.
“This has caused an increased demand in the rental sector, with some landlords hiking rents by up to 20% in some properties, which is effectively a no-fault eviction for renters that find themselves faced with this proposition.
“However, I do believe that student landlords have been overlooked in the bill. Student landlords depend on having a steady income over 12 months, and taking that away leaves major uncertainty for them. I believe the rolling contract should not apply to students. It’s not uncommon for students to drop out or suspend their studies. Most of the time, they can find someone quickly to take over their room and tenancy.”
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