New legislation aimed at protecting tenants in England could contribute to growing pressures on the student housing market, according to experts.
The warning comes as analysis reveals that students have become increasingly dependent on an already shrinking private rental sector (PRS) in recent years.
The Renters’ Rights Bill, which would ban “no-fault evictions”, will also abolish fixed-term tenancies, meaning a lease can be ended with just two months’ notice.
However, if the bill becomes law, it could make students comparatively much less attractive tenants than others in the private rental sector, according to Victoria Tolmie-Loverseed, assistant chief executive of standards at student housing charity Unipol.
“We have concerns that that’s going to reduce the amount of housing for students living in the PRS and I think the impact of that is not fully understood,” she said.
She said the bill – which is designed to protect tenants’ rights – will make it difficult for landlords to operate in the student market and will increase the problems faced by students every year.
“If you take away a serious portion of the affordable housing stock that second- and third-year students rely on, then you’re reducing the affordability of university as well,” added Ms Tolmie-Loverseed.
Because the student rental market relies on fixed-term agreements to facilitate the availability of properties in line with the academic year, the estate agent membership organisation Propertymark warned that removing this mechanism could “seriously disrupt the market”.
Martin Blakey, former chief executive of Unipol, said the bill will be particularly problematic for landlords if students choose to leave their property after their exams, shortening their normal tenancy lengths. Landlords are likely to shift to joint tenancies to make this notice process more difficult, he added.
“So, probably not good news for students where there are competing rental/tourist markets – Brighton, Bristol, York, London, etc – where those markets are less troublesome and risky.”
With the government suggesting that the bill may be in place by next summer, Tom Walker, co-founder of student accommodation portal StuRents, said the pace of the legislation could surprise the industry.
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“This means the fixed-term tenancies that many landlords and letting agents will start signing with students in the next month or so for tenancies starting next academic year will be impacted, something the majority of student property managers are unaware of and unprepared for,” he added.
“Some people are concerned that there will be a mass exodus of landlords providing student homes.”
While there may be a lot of consolidation within the houses in multiple occupation (HMO) market, Mr Walker said he was not convinced that the supply of student HMOs will contract.
Faced with an expensive and dwindling purpose-built student accommodation (PBSA) market, recent figures reveal a surge in the number of students living in the private rental sector, at the same time that the total housing stock has declined.
Analysis of government data from commercial property firm CBRE UK shows that the estimated total number of beds in HMO dwellings fell by 9 per cent between 2018-19 and 2022-23.
And Times Higher Education’s analysis of Higher Education Statistics Agency (Hesa) statistics shows that 42 per cent of accommodation demand among entrant students in 2022-23 was in HMOs. This was up from 32 per cent the year before, and just 24 per cent in 2017-18.
Experts said that the influx of students in this section of the market reflects the huge increases in international students – particularly Indian and Nigerian arrivals in the postgraduate taught market – that year.
A total 63 per cent of taught postgraduate accommodation demand was in HMOs in 2022-23, but it is expected that this proportion will have stabilised since the year captured by the much-delayed figures.
The remaining 58 per cent of accommodation demand among all entrants for 2022-23 was for PBSA – those in provider-maintained properties or private sector halls – which was well below a peak of 76 per cent five years previously.
Ms Tolmie-Loverseed said some universities, particularly lower-tariff institutions, have been looking to make accommodation less risky and have been reducing their portfolios over time.
“The majority of universities are not expanding their stock, they’re looking to the private rental sector to do that, and the private sector has slowed down a little since the pandemic,” she added.
The Ministry of Housing, Communities and Local Government said it has tried to find a balance between ensuring students will benefit from the new tenancy system, and ensuring properties are available every year.
“We want all tenants, including students, to benefit from the increased security and flexibility the renters’ rights bill will provide," added a spokesperson.
