Purpose-built student accommodation and renters reform

The Impact of the Renters Reform Bill on Purpose-Built Student Accommodation: A Comprehensive Analysis

The Renters Reform Bill, introduced in 2021, aims to revolutionise the rental market in England by introducing a number of significant changes. One of the most notable changes is the abolition of the Assured Shorthold Tenancy (AST) regime, which has been the cornerstone of the private rental sector for decades. This move has raised concerns among investors and students alike, particularly in the context of purpose-built student accommodation (PBSA).

The AST Regime and Its Impact on PBSA

The AST regime has long been the standard form of tenancy agreement in the private rental sector. It provides landlords with a degree of certainty and control over their properties, while also offering tenants some protection from unfair evictions. However, the regime has also been criticised for its flexibility, which has allowed landlords to exploit tenants and drive up rents.

The Renters Reform Bill seeks to address these concerns by introducing a number of changes to the AST regime. These include:

• The introduction of a new form of tenancy agreement called the “Rented Homes Act 2022 tenancy” (RHA tenancy). The RHA tenancy will offer tenants stronger protections, including the right to request a periodic tenancy after the initial fixed-term period ends.
• The abolition of Section 21 evictions, which allow landlords to evict tenants without a reason. Landlords will now need to provide a valid reason for evicting a tenant, such as rent arrears or anti-social behavior.
• The introduction of a new ground for eviction called “no fault evictions”. Landlords will be able to use no fault evictions to evict tenants if they wish to sell their property or move in themselves. However, tenants will be entitled to compensation if they are evicted under this ground.

The Impact of the Bill on PBSA

The proposed changes to the AST regime have raised concerns among investors and students in PBSA. PBSA is a specialised form of student accommodation that is typically purpose-built and managed by specialist providers. It is often seen as a more secure and reliable option for students than traditional PRS accommodation.

The abolition of the AST regime could make it more difficult for PBSA providers to attract and retain tenants. This is because the RHA tenancy offers tenants more flexibility and control over their tenancies, which could make them less willing to sign up for long-term contracts. Additionally, the introduction of no fault evictions could make it more difficult for PBSA providers to evict problem tenants.

However, there are also some potential benefits to PBSA providers from the Renters Reform Bill. For example, the abolition of Section 21 evictions could make it more difficult for tenants to leave their accommodation at short notice, which could lead to increased occupancy rates and rental income.

The Potential for a Dual Market

One of the most significant potential impacts of the Renters Reform Bill on PBSA is the creation of a dual market in student accommodation. This could occur if PBSA becomes the only realistic option for students who want the certainty of a fixed-term tenancy. This could lead to higher rents and reduced choice for students.

Concerns about the Exemption for PBSA

The Renters Reform Bill exempts PBSA from some of the key changes to the AST regime. This means that PBSA providers will continue to be able to offer fixed-term tenancies and evict tenants without a reason. This exemption has been criticised by some who argue that it gives PBSA providers an unfair advantage over PRS landlords.

Conclusion

The Renters Reform Bill is likely to have a significant impact on the PBSA sector. The proposed changes to the AST regime could make it more difficult for PBSA providers to attract and retain tenants. However, there are also some potential benefits to PBSA providers from the bill. The creation of a dual market in student accommodation is a major concern, and it is important to monitor the impact of the bill on the sector closely.

In addition to the points raised above, here are some additional considerations for the future of PBSA:

• The development of new technologies and trends in the student accommodation market. For example, the increasing popularity of co-living spaces and the use of technology to manage student accommodation could have a significant impact on the sector.
• The changing demographics of the student population. The increasing number of international students and the growing number of mature students are likely to have implications for the types of accommodation that are in demand.
• The broader economic and political environment. Changes in the economy and government policy could also have a significant impact on the PBSA sector.

It is important to keep these factors in mind as the PBSA exemption is a key provision of the bill. This exemption means that PBSA providers will be able to continue to offer fixed-term tenancies, which is important for students who need certainty about their accommodation. However, there are concerns that the exemption could lead to a two-tier student housing market.

A two-tier market would arise if PBSA became the only realistic option for students who want the certainty of a fixed-term tenancy. This could lead to higher rents and reduced choice for students. Additionally, it could put pressure on PRS landlords to offer similar terms to their tenants, which could further drive up rents in the PRS sector.

The government has argued that the PBSA exemption is necessary to protect students and ensure that they have access to quality accommodation. However, critics argue that the exemption is unfair to PRS landlords and could lead to a market distortion.

The Renters Reform Bill is a complex piece of legislation with far-reaching implications for the rental market. The impact of the bill on PBSA is still uncertain, but it is likely to have a significant impact on the sector. It is important to monitor the impact of the bill closely and to ensure that it is implemented in a way that is fair to all parties involved.

In addition to the points raised above, here are some other potential impacts of the Renters Reform Bill on PBSA:

• The cost of PBSA could increase as providers seek to cover the costs of complying with the new regulations.
• The quality of PBSA could improve as providers seek to differentiate their product from PRS accommodation.
• The demand for PBSA could increase as students seek the security of a fixed-term tenancy.

It is important to note that these are just potential impacts, and the actual impact of the bill on PBSA will depend on a number of factors, including the way in which the bill is implemented and the overall economic climate.

The Renters Reform Bill is likely to have a significant impact on the PBSA sector. The proposed changes to the AST regime could make it more difficult for PBSA providers to attract and retain tenants, but there are also some potential benefits to PBSA providers from the bill. The creation of a dual market in student accommodation is a major concern, and it is important to monitor the impact of the bill on the sector closely.