How Labour’s Proposed Reforms Could Impact Student Tenancies

With Labour’s Renters’ Rights Bill on the horizon, landlords across the UK are preparing for a wave of changes to the private rented sector (PRS). While many of these reforms are aimed at improving tenant rights, they also present unique challenges for landlords, particularly those who rent to students. In cities like Manchester, where the student rental market is robust, the effects of these changes could be significant.

If you're a landlord with student tenants, it’s essential to understand how these reforms—particularly the abolition of fixed-term tenancies and changes to eviction rules—might impact your rental business. In this article, we’ll explore what the Renters’ Rights Bill could mean for student landlords and offer strategies to help you adapt.

Abolition of Fixed-Term Tenancies: A Major Shift for Student Rentals

One of the most debated aspects of Labour’s Renters’ Rights Bill is the proposal to abolish fixed-term tenancies in favor of mandatory periodic tenancies. This change would give tenants the flexibility to leave their rental property with minimal notice, as opposed to being tied into a fixed-term contract.

• Impact on Student Tenancies: In cities like Manchester, where students make up a significant portion of the rental market, fixed-term tenancies have long been the standard. These agreements align with the academic year, providing both landlords and tenants with clear start and end dates. 63% of landlords believe the abolition of fixed-term tenancies will have a negative impact on student rentals. Without fixed terms, landlords may face increased tenant turnover and unpredictable vacancy periods, making it harder to manage cash flow and plan for maintenance between tenancies.
• Managing Uncertainty: Under periodic tenancies, students could potentially leave partway through the academic year, leaving landlords with unfilled properties during quieter rental periods. This lack of stability is a particular concern in university cities like Manchester, where the rental cycle is closely tied to the academic calendar.

Tip for Landlords: To mitigate the risks of higher turnover, consider offering incentives for longer stays, such as slightly reduced rent for students who commit to a full academic year. You can also establish positive relationships with local universities to promote your properties early in the rental cycle.

Section 21 and Eviction Challenges

The abolition of Section 21 ‘no-fault’ evictions is another key component of the Renters’ Rights Bill. This will make it more difficult for landlords to regain possession of their properties without a valid reason, such as rent arrears or damage to the property.

• Impact on Student Properties: Student tenancies can sometimes come with a higher risk of property damage or disruption, simply due to the nature of student living. With Section 21 no longer an option, landlords will need to rely on other, often slower, legal avenues to regain possession of their property if issues arise. This could make it harder to address problems quickly, particularly if you need to reclaim the property for refurbishment or to prepare for the next academic year.

Tip for Landlords: Make sure your tenancy agreements clearly outline the responsibilities of tenants, including clauses related to property care and noise disturbances. Being clear from the start can help prevent issues later. In addition, consider carrying out regular inspections to catch any issues early, reducing the likelihood of needing to rely on eviction.

Rent Increases and Affordability for Students

Labour’s proposed reforms also introduce stricter rules around rent increases. While the Bill doesn’t cap rents, it does limit how and when landlords can raise rent, and allows tenants to challenge unjustified rent hikes. For students, who are often on tight budgets, this could provide much-needed protection. However, it also means landlords will need to be strategic about pricing their properties from the outset.

• Impact on Landlords: With rent increases restricted to once per year, landlords will need to carefully consider rent levels at the start of each tenancy. This is particularly important for student lets, where properties are typically rented for 9-12 months at a time. In Manchester, where student housing is in high demand, setting competitive rents while staying within the limits of the new regulations will be key to maintaining profitability.

Tip for Landlords: Conduct a thorough market analysis before setting your rental prices to ensure they are competitive. Factor in rising costs such as maintenance and utilities, and be prepared to justify any future increases under the new rules.

The Impact of Pets and New Rights for Students

The Renters’ Rights Bill also includes measures that could affect student landlords in unexpected ways. One such reform is the introduction of the right for tenants to request a pet, with landlords being prohibited from unreasonably refusing the request.

• Impact on Student Rentals: Many student properties, especially shared houses or HMOs, are not designed to accommodate pets. However, the Bill would require landlords to provide a valid reason for refusing a tenant’s request to keep a pet, potentially creating new challenges for landlords in managing their properties.

Tip for Landlords: If your property is not suitable for pets, ensure you have clear, reasonable grounds in your tenancy agreements for refusing such requests.

Long-Term Changes to the Student Rental Market

While Labour’s proposed reforms are designed to provide greater protection and flexibility for tenants, they also create uncertainty for landlords, particularly those who rely on the predictable nature of fixed-term student lets. The shift towards periodic tenancies could disrupt the rhythm of the student rental market, leading to more short-term tenancies and higher turnover rates.

• What This Means for the Future: The student rental market has long been a stable investment for landlords in cities like Manchester, thanks to the regular influx of new students each academic year. However, these changes could make it harder for landlords to plan for the long term, as the abolition of fixed-term tenancies introduces a level of unpredictability that hasn’t been seen before.

Tip for Landlords: Focus on building relationships with your tenants and offering incentives for them to stay longer. By creating a positive rental experience, you may be able to reduce turnover and retain tenants for multiple academic years.

Conclusion: Navigating the Impact on Student Tenancies

Labour’s Renters’ Rights Bill will bring significant changes to the way student tenancies are managed. While these reforms are designed to protect tenants, they also introduce new challenges for landlords, particularly in cities like Manchester where the student market is an essential part of the rental sector. By staying informed and adjusting your strategies—whether through incentivising longer stays, reviewing rent levels, or updating tenancy agreements—you can navigate these changes and continue to succeed in the student rental market.

If you’re a landlord with student properties and want to discuss how these reforms might impact your portfolio, feel free to contact us. We’re here to help you stay ahead of the curve.

Source of Data:

The statistics and insights mentioned in this article are based on findings from Goodlord’s State of the Lettings Industry Report 2024, focusing on the impact of proposed legislative changes on student tenancies in the North West.