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Student Rental Market Faces Turmoil Over Proposed Renters Reform Bill

The National Residential Landlords Association (NRLA) warns that the recently introduced Renters Reform Bill could potentially create “chaos” in the student rental market. The Bill aims to eliminate fixed-term tenancies, replacing them with rolling tenancies without any fixed end date. This change might spell financial trouble for landlords. David Hannah, Chairman of Cornerstone Group International, has elaborated on the possible far-reaching effects of the bill on the student rental market.

Student landlords have traditionally offered 12-month fixed-term contracts, matching the academic year, to prevent properties from remaining vacant during non-term periods. However, the proposed bill’s flexible approach could grant tenants a 2-month notice period. Consequently, if a student decides to move out prematurely, a room could remain unoccupied for several months until the onset of the next academic year, leading to a substantial income loss for landlords. The National Student Accommodation Survey reports that an average room in a student property rents for £535 per month.

The rental market has already witnessed a wave of buy-to-let landlords leaving, with over a third of a million landlords considering exiting the rental market due to the forthcoming Renters’ Reform Bill. This exit coincides with new data from Cornerstone Tax, revealing that only one in five landlords considers their investment successful.

There are growing concerns over an emerging shortage of stock in the student rental market. Institutions like the University of York and the University of Bristol have resorted to housing students in nearby towns and cities. The University of Edinburgh has had to convert common rooms into dormitories with bunk beds, while the University of Glasgow has accommodated students in hotels. In Durham, students were seen queuing overnight outside letting agencies to secure accommodation. Hannah cautions that if landlords continue to abandon the student rental market, student accommodation companies exempt from the proposed bill might struggle to meet demand.

David Hannah, Chairman at Cornerstone Group International, outlined his concerns over the potential impact of the Rental Reform Bill on the student rental market:

“The launch of the Renters’ Reform Bill has been eagerly awaited, and I regard it as a significant addition to the rental market. Record-high rents across the UK have posed affordability challenges for individuals intending to buy property, resulting in more people renting for extended periods. This situation has increased demand in the rental sector, with some landlords increasing rents by up to 20% in some properties, effectively enforcing a no-fault eviction for tenants unable to meet this demand.

“However, I believe that the Bill overlooks student landlords, who rely on a consistent 12-month income, and removing this guarantees major uncertainty for them. In my opinion, the rolling contract should not apply to students. It’s not unusual for students to discontinue or pause their studies, but typically, they manage to find someone promptly to assume their room and tenancy.”