Summary
Our series of articles on the Renters’ Rights Bill (most recent article here) have set out the passage of this controversial Bill and the likely effects it may have on the private rented sector.
As the Bill reaches the final days of the House of Lords Committee stage, the Government remains determined to achieve Royal Assent before the Parliamentary summer break on 22 July 2025.
One vital area remains unresolved however in respect of Purpose-Built Student Accommodation (“PBSA”) providers and the Government’s recent U-turn has introduced the possibility of an unexpected transition period for such providers.
What’s happened so far?
The Government’s intention from the outset has been clear. The explanatory notes to the Bill from September 2024 expressly state that PBSAs:
“will be exempt from these changes as long as the provider is registered for government-approved codes, since these tenancies are not assured.”
However, this statement is not legally correct. The criteria for whether or not a landlord can grant assured tenancies is not determined by registration with a government approved code but, instead, whether it satisfies statutory criteria as to the types of tenancies that cannot be assured.
This mistake was, belatedly, recognised and to assuage the collective concerns of the student market, the Government expressly stated on 18 December 2024 that:
“The Bill will exempt Purpose Built Student Accommodation (PBSA) from the assured tenancy system if the landlord is signed up to a government approved code of management practice.”
PBSA providers breathed a sigh of collective relief and took the view that the upcoming changes in the Bill would not affect them so long as they complied with the wording of the new exemption.
While no wording has ever been provided for this exemption, the general expectation was that providers who were compliant with the Unipol/ANUK Code would be exempt.
What’s changed?
As part of the ongoing Committee stage and the discussions that have taken place here, the Government’s position now appears to have changed. The Ministry of Housing, Communities & Local Government stated on 22 April 2025 that:
“the Government intend that any new purpose-built student accommodation tenancies created after transition will be exempted from the assured tenancy system following transition, as long as the landlord is signed up to a government-approved code of conduct”
(emphasis added)
This minor change, which has subsequently been communicated and clarified with the BPF and other industry bodies, suggests that the new intention is that:
- Tenancies which have already been signed for the 2025/2026 academic year in PBSA properties will be affected by the changes in the Bill (thereby converting into assured periodic tenancies); but
- New PBSA tenancies, so long as they comply with the exemption, will be common law tenancies and therefore will not be affected by the Bill.
This minor change creates a transition period which was not anticipated by the PBSA sector given the clear assurances by the Government to date that they will be exempt. While this transition period may be short, it does create a very real risk for PBSA providers across a number of areas, including:
- Tenancies which they have already granted for the 2025/2026 academic year may be converted into an assured periodic tenancy, in respect of which landlords have less day-to-day control and management powers;
- Providers will have less ability to terminate these tenancies and therefore may see students remaining in their properties longer than the anticipated fixed term. As a result, providers will not be able to guarantee vacant rooms for new students in the 2026/2027 academic year. It is anticipated that this could also affect acceptance of university spaces if students are unable to secure accommodation;
- Providers may be unable to rely on the new possession ground 4a depending on the type of properties and number of occupants;
- Providers will need to adapt and recognise the numerous new practical changes introduced by the Bill, for example the inability to demand advance rent which may adversely affect rental payment schedules;
- Students will be able to terminate their tenancies on two months which may create rental voids which were not factored into previous financial forecasting;
- The Bill prohibits landlords from discriminating against tenants with children but it is unclear how this would align with some PBSA accommodation which may not be suitable for families;
- The strengthened abilities for tenants to request pets again may not be appropriate for PBSA accommodation;
- There may be planning or management implications, for example where occupants remain in student-only properties once they have finished studying; and
- This would create significant practical difficulties for overseas students who arrive in the UK under student visas with the promise of suitable accommodation.
Conclusions
It is hoped by PBSA providers that the Government will recognise these concerns and perform (another) U-turn so as to remove this transition period and negate this risk, whether by amendments to the Bill or secondary legislation. We understand that the British Property Federation is working with other interested parties to seek to alleviate these concerns.
However, it remains to be seen whether these options are legally possible or politically attractive. In the meantime, PBSA providers will no doubt be anxiously awaiting the outcome of these latest developments.
