Renting to students remains a popular strategy for landlords seeking strong demand and attractive yields, especially in university cities such as London. However, recent legislative changes, particularly the Renters’ Rights Act, have introduced new rules affecting fixed terms, rent in advance, and possession grounds, which landlords must carefully navigate.

New Ground 4A for Full-Time Students in HMOs

The Renters’ Rights Act has introduced a new Section 8 possession ground, known as Ground 4A, specifically designed for Houses in Multiple Occupation (HMOs) let to full-time students. This provision allows landlords to regain possession of a student HMO to re-let it to a new group of full-time students, aligning tenancies with the academic calendar despite the abolition of fixed terms.

To rely on Ground 4A, landlords must ensure the property qualifies as an HMO under section 254 of the Housing Act 2004, meaning it must have at least three occupants from two or more households sharing basic facilities. This ground cannot be used for self-contained flats or smaller properties that do not meet the legal HMO definition, even if occupied by full-time students.

Additionally, all tenants must have been full-time students at the start of the tenancy, or the landlord must have reasonably believed they would become full-time students during the tenancy. This “student test” is assessed at the outset, and subsequent changes in student status do not affect the landlord’s right to use Ground 4A.

Landlords must also intend to let the property to another group of full-time students for the following academic year and provide tenants with a written notice confirming their intention to rely on Ground 4A. For new tenancies, this notice must be given at or before the tenancy start date. For existing tenancies that converted to periodic contracts on 1 May 2026, landlords had until 31 May 2026 to serve this transitional notice to preserve their rights.

Ground 4A notices can only expire between 1 June and 30 September each year, with a minimum of four months’ notice required. Furthermore, landlords cannot use Ground 4A if the tenancy agreement for the upcoming academic year was signed more than six months before the tenant’s entitlement to move in. This “6-month rule” prevents landlords from pressuring students into signing contracts too early.

Rent in Advance and Guarantors

Traditionally, landlords have requested rent in advance to mitigate risks associated with student tenants, particularly those from overseas who may lack UK income or credit history. However, the Renters’ Rights Act now limits the amount landlords can require upfront.

In England, landlords may only request one month’s rent in advance, eliminating the previous practice of asking for six or twelve months upfront. Wales has similar restrictions under the Renting Homes (Fees etc.) (Wales) Act, allowing only one rent period’s worth of rent in advance.

Given these restrictions, guarantors have become increasingly important for managing risk in student lets. It is common practice in joint tenancies to make guarantors jointly and severally liable, meaning if one tenant fails to pay, another tenant’s guarantor may be responsible for the full rent shortfall. This arrangement often surprises parents, so clear communication is essential.

For international students, securing a UK-based guarantor or using a professional guarantor service is often necessary, as overseas guarantors are difficult to enforce through UK courts. Landlords must conduct thorough checks on guarantors, verifying their UK presence and financial capacity to cover the entire rent if required, rather than relying solely on a name and signature.

Right to Rent Checks for Student Tenants

Landlords in England must carry out Right to Rent checks on all adult tenants, including students, regardless of whether they are named on the tenancy agreement. Failure to comply can result in significant fines, up to £10,000 for a first offence and £20,000 for repeat breaches.

For students with a time-limited right to rent, such as most international students, the check must be conducted no more than 28 days before the tenancy start date to remain valid. Conducting the check too early, for example several months before a September move-in, invalidates the process.

In Wales, there is currently no equivalent Right to Rent scheme, so landlords are not required to verify tenants’ immigration status.

Handling Council Tax and Bills When Renting to Students

A property occupied entirely by full-time students qualifies for a Class N council tax exemption. However, landlords must monitor the tenancy closely, as the exemption is lost immediately if a tenant drops out of university mid-term or if a non-student partner moves in, potentially resulting in a retrospective council tax bill.

For HMOs let on a room-by-room basis with separate contracts, landlords are legally liable for council tax and should factor this cost into the rent. Where tenants share a single joint contract, the tenants themselves hold primary liability for council tax.

Regarding utilities such as gas, electricity, and broadband, landlords can either require tenants to set up their own accounts or include bills within the rent. If utilities are included, tenancy agreements must clearly outline billing arrangements and include a fair usage clause that complies with Ofgem’s maximum resale rules to avoid accusations of overcharging.

Landlords should also be aware that any single joint tenant can now serve a valid two months’ notice to terminate the entire tenancy, which can destabilise bills-inclusive arrangements unexpectedly.

What this means for landlords

Landlords letting to students must adapt to a more regulated environment where upfront rent demands are capped and possession grounds are more narrowly defined. The introduction of Ground 4A offers a tailored solution for student HMOs but requires strict compliance with HMO definitions and timing rules.

Guarantors have become a critical tool for managing financial risk, especially given the limitations on rent in advance and the challenges posed by international tenants. Comprehensive tenant and guarantor referencing is essential to safeguard rental income.

Additionally, landlords must remain vigilant with Right to Rent checks and council tax obligations to avoid costly penalties and unexpected charges. Clear communication with tenants about bills and tenancy terms is more important than ever to maintain stable and compliant student lets.

Source: Based on reporting from OpenRent

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TLA update

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