The introduction of the Renters’ Rights Act in England is set to allow university students to end their tenancies early with just two months’ notice, potentially reshaping the student rental market. While this change offers greater flexibility for students, it also raises concerns among landlords and industry experts about financial impacts and housing availability.

Early termination of tenancies under new legislation

The Renters’ Rights Act abolishes fixed-term tenancies and enables renters to terminate their agreements with two months’ notice. This means students can choose to leave their accommodation earlier than the traditional academic year end, which often falls in August or September.

According to a report in The Times, many humanities students have no lectures during the summer term, using the period from April to June for revision, exams, and final submissions. With the new law, students handing in notice in May could end their contracts by July, effectively shortening their tenancy by several months.

Potential impact on student landlords and rent levels

Chris Norris, chief policy officer at the National Residential Landlords Association (NRLA), highlighted the likelihood of students opting to leave tenancies early depending on their course and personal circumstances. He noted, “Some students might be looking at their timetable and thinking, ‘Well, I could be done in six months.’ But they will also have to balance that with at what point they want to move back in with their mum and dad, and how much they enjoy the social side of student life.”

Mr Norris also warned of a probable “quite significant” increase in student rents. Landlords may seek to compensate for shorter tenancy periods by raising rents to maintain profitability, as they adjust to making returns over eight months instead of the usual twelve.

Concerns over housing stock and market reaction

Student housing charity Unipol has expressed concerns that landlords could face income losses due to the new legislation, which might prompt some to exit the student rental market. Nicola Brown, Unipol’s hub services director, questioned how landlords exclusively renting to students will respond to reduced income over time.

She observed a decline in houses in multiple occupation (HMOs) available for students in cities like Nottingham and Leeds, warning that “a decrease in stock over time could lead to rent rises and less choice.” This reduction in available properties could exacerbate affordability and availability issues for student renters.

Recent government adjustments on student possession grounds

In a related development, the government has reversed its position on the student possession ground. For student tenancies in HMOs agreed before 1 May, landlords have until 31 May to notify tenants that possession grounds may be used to make properties available for incoming students.

Landlords can issue formal possession notices between 1 May and 31 July. Notably, for one year only, the minimum notice period will be two months instead of the usual four, providing a shorter timeframe for repossession in these cases.

What this means for landlords

Landlords specialising in student accommodation should prepare for a shift in tenancy dynamics, with potentially shorter contracts and increased turnover. The possibility of higher rents may help offset income losses but could also reduce demand or increase void periods if students seek alternative housing options.

Moreover, a shrinking supply of student housing, as some landlords exit the market, could intensify competition for remaining properties, impacting long-term investment strategies. Staying informed about legislative changes and adjusting tenancy agreements and rent pricing accordingly will be crucial for landlords navigating this evolving landscape.

Source: Based on reporting from The Times

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