As has already been identified by Martin Blakey (see Renters’ Rights Bill – The Devil’s in the Detail - HEPI) the 12 months after the Bill is implemented will cause a few headaches for PBSA operators but how is the Act likely to impact on the supply of HMO’s and will it, as some hope, drive demand for PBSA?

There is little doubt that as the Government rushes to get the Act through parliament, with Royal Assent now likely to be in the autumn at the earliest, it has ended up in a position where neither of the major groups, landlords or tenants, are happy with the final version. Renters Reform groups have fractured and are critical that Section 21 evictions have not been immediately banned, as was promised, student groups are unhappy with the exemption for PBSA and small landlords who have made a property investment for their pension feel that they are being cast in the same light as a Middle Ages feudal landowner!

There is no doubt that by having a single Bill covering the entire rental market, the very different relatively short-term needs of students have been a last-minute consideration. If anything, the Bill has highlighted the fact that student accommodation falls between the cracks of the Department for Education and the Ministry of Housing, Communities and Local Government – a student housing champion or Tsar would perhaps be a positive step going forward.

As has been widely broadcast there has been the odd amendment to the Bill to try and assist the student market. The Student Possession ground will enable a landlord to regain possession of their property to let to new student tenants, but only between June and September. A cynic might say that this single change exemplifies Whitehall’s focus on an Oxbridge calendar where courses only begin in the autumn once students return from helping with the harvest! Whilst the Government and many others are encouraging universities to be innovative in all aspects of course delivery this amendment really does reinforce the very traditional academic calendar and does not assist those institutions trying to develop courses with mid-year starts.

The major change though will clearly be the switch to periodic rather than fixed term tenancies in the HMO market. Students will have the right to terminate their tenancy with 2 months’ notice and given the low-level activity in some courses post Easter this might prove a popular option. Landlords have a number of options they could:

a. Exit the student market and look to other types of tenants

b. Increase rents to offset the risk of increased void periods

c. Bring forward the start date of the tenancy to offset the risk of students giving notice and leaving during the summer term

d. Do nothing and see what happens!

The Bill will attract a lot of publicity and there is little doubt that students will be better placed to know their rights. However, in my opinion the last option is likely to be the case with a lot of landlords so it is unlikely that there will be a cataclysmic change in the market and more an evolution over the next few years.

Any decline in the HMO supply and consequently higher rents could lead to an increase in demand for PBSA but clearly the price differential means that it will only be the more affordable PBSA offering that might benefit. In more general terms any decline in the HMO supply can only be viewed as a negative as it will remove from the market an accommodation option that is affordable for some students and as such make the residential university experience less attractive for some. In the longer term anything that impacts on the residential university model cannot be good for PBSA.

I am very grateful to David Smith a partner at Spector Constant & Williams and recognized authority on the Act for his input to this article. David will be speaking at our Student Accommodation Conference on December 4th.