Overcoming Obstacles in Student Growth: Strategies for Success
The Renters' Rights Bill, rapidly progressing through the UK Parliament and expected to come into effect soon, is set to bring significant changes to the private rental sector (PRS) and Purpose-Built Student Accommodation (PBSA) supply.
### Current Impact on PBSA Supply and Private Rental Market
The Bill introduces several reforms that will impact PBSA providers and the broader private rental market. One such change is the abolition of fixed-term assured shorthold tenancies (ASTs), making all tenancies periodic by default. This removes certainty of fixed-term leases, which may concern PBSA providers who traditionally rely on fixed terms aligned with academic years.
Additionally, rent increases will be limited to once per year, and rent cannot exceed the property's advertised price. This constraint reduces landlord flexibility in adjusting rents in response to market demand, potentially affecting PBSA operators’ revenue management strategies.
The abolition of Section 21 "no-fault" evictions introduces greater security for tenants but may make it harder for landlords, including PBSA owners, to regain possession quickly when needed. This could reduce landlord willingness to supply accommodation or invest in PBSA, where turnover timing is critical.
The Bill also extends the Decent Homes Standard and Awaab’s Law to the PRS, requiring improved property conditions. While raising standards benefits tenants, it may increase maintenance costs for PBSA and landlords alike.
Landlords cannot refuse tenants with pets or those receiving benefits, and tenants gain the right to challenge rent increases and request pet accommodations. This greater tenant empowerment may complicate PBSA management but also encourages diversity of occupancy.
### Potential Future Implications
The move to periodic tenancies and increased restrictions could make investment in PBSA less attractive due to reduced control over lease lengths and rental income stability. Developers and operators may recalibrate their supply plans pending how the new regime affects returns.
The Bill’s intent to provide long-term tenant security might encourage PBSA operators to innovate tenancy models or enhance property management to retain quality tenants, possibly improving overall accommodation standards.
By limiting “no-fault” evictions and rent hikes, the PRS—including PBSA—may become more tenant-friendly but potentially less profitable for landlords, which could lead some to exit the market or reduce speculative supply increases.
The introduction of landlord redress schemes, a PRS database, and stricter quality standards will increase administrative responsibilities and costs for PBSA providers and landlords. This might particularly impact smaller operators and those with thin margins.
While the Bill seeks to curb abusive practices and improve affordability and security, the reduced landlord flexibility might indirectly tighten supply, putting upward pressure on rents in the medium to long term unless new supply compensates.
In summary, the Renters' Rights Bill significantly strengthens tenant protections and raises standards in the PRS. For the PBSA sector, this likely means greater tenant security but reduced landlord control, potentially slowing supply growth due to increased risk and compliance costs. The private rental market may see a rebalancing towards long-term tenancies and higher-quality but possibly less flexible and more costly rental accommodation.
The full market impact will require close monitoring after implementation, as mandated reviews within three years are planned to assess renter security and housing conditions. The current policy approach is not meeting the need for PBSA adequately, and changes must be made to encourage and support the much-needed delivery of PBSA across the country due to the worsening supply-demand imbalance.
- The extension of the Decent Homes Standard and Awaab’s Law to Purpose-Built Student Accommodation (PBSA) may increase maintenance costs for PBSA providers, pushing some smaller operators with thin margins to exit the market.
- The Renters' Rights Bill could lead to a shift in PBSA operators' strategies, as they might innovate tenancy models or enhance property management to retain quality tenants, thereby potentially improving overall accommodation standards.
- The limited flexibility for landlords in adjusting rents, along with the abolition of Section 21 "no-fault" evictions, might encourage more education-and-self-development within the PBSA sector, as operators aim to build stronger, long-term relationships with their tenants to secure continued occupancy.
