Renters’ Rights Bill could drive up student rents

Renters’ Rights Bill could drive up student rents

0:01 AM, 20th September 2024, About 3 weeks ago 8

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Student landlords face chaos under Labour as many could be forced to take out rental insurance to cover the cost of rent arrears.

The Telegraph says the Renters’ Rights Bill will stop tenants from paying more than one month’s rent upfront.

This poses a problem since most students pay their rent in instalments that align with their maintenance loan payments.

In an interview with The Telegraph, Tom Walker founder of student accommodation website StuRents says that tenants will find it tough to manage their loans and make monthly payments.

He adds this could push many landlords to get rental insurance to cover any missed payments.

Students will struggle to budget

Tom Walker, co-founder of StuRents, told the Telegraph, that landlords taking out insurance could be forced to increase rents by between 5% and 8% in the next academic year.

The average student rent outside London is currently £150.88 per person per week, according to StuRents. An 8% rise could cost students up to £628.

Mr Walker said to The Telegraph: “The bill is completely rewriting how students pay their rent, and it undermines the fact students use their maintenance loans to pay it. Unless the government changes the maintenance loan system to be paid on a monthly basis, students will really struggle to budget. We’ll probably see arrears rates climb.”

Smaller landlords considering rent insurance policies

Mr Walker told the Telegraph that since the Renters’ Rights bill was published last week, he has talked to several major student accommodation providers and estate agents representing smaller landlords who are considering rent insurance policies.

Rent insurance, or a “rent guarantor,” is a service provided by companies that quickly pays landlords if tenants don’t pay their rent. Some policies also cover eviction costs, including court fees.

The Telegraph says if a landlord with a four-bed student house were to take out a rent insurance policy with Rent Guarantor, a company which offers rent insurance, it would cost them £1,760 a year.

Student landlords reliant on fixed-term contracts

Student landlords are also worried about the ban on fixed-term tenancies which could cause chaos in the private rented sector.

Landlords are reliant on fixed-term contracts as they offer security as to the length of time a tenancy will last.

However, if the government goes ahead with its ban on fixed-term tenancies, landlords will have no guarantees that students will move out at the end of the academic year.

Under the new system, all tenancies will be ongoing unless terminated by either party with a two-month notice period.

Labour says this change aims to address the unfairness of renters being forced to pay for substandard housing and provide greater flexibility for both tenants and landlords to adapt to evolving circumstances.


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Jo Westlake

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11:17 AM, 20th September 2024, About 3 weeks ago

Do "most" students pay termly? I find that quite surprising.
I've been a student landlord for over 25 years and I very rarely charge termly rent. The vast majority of mine pay monthly. Occasionally people with trust funds ask if they can do termly or annual payments due to the administration of accessing the trust funds, but it's very rare. The only other exception would be international students without a UK guarantor.

I guess this is going to be far more of a cashflow issue for the Purpose Built Student Housing providers who are maybe more likely to currently expect termly payments.

Fixed term tenancies are crucial for the student market. If university cities want to remain attractive to students (and all the money they bring with them) it's essential there is a wide range of housing options available to those students close to the university. If people want to remain in their university city after graduation there are plenty of houses outside the student areas that are often cheaper and more appropriate for adult life, with better parking and outside space..

NigelH

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12:31 PM, 20th September 2024, About 3 weeks ago

Another significant concern is that students will leave early, as then there is a void before the next years intake

Marlena Topple

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15:21 PM, 20th September 2024, About 3 weeks ago

I am a student landlord and it is very rare for my tenants to pay termly. It is also rare for them not to meet their rent obligations which is to their credit. As for rent insurance that sounds like a total non starter. The biggest threat that I see is the ability to leave after 2 months notice leaving a void that cannot be filled by other students. Does anyone know how this works in an HMO where a group of tenants are on a joint tenancy? I.e. Would all the named people on the tenancy have to give notice at the same time?

Sam Smith

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23:34 PM, 20th September 2024, About 3 weeks ago

I wonder how this plays out. Will students leave it late to find accommodation and at the same time give early notice to terminate to time it to when their course ends?

Student term is between late September 2024 and early June 2024. So about 8.5 months.

We generally give 11 month contracts to students from 1 August to 2 July each year. So effectively could be looking at 2 to 3 months of no rent instead of the current 1 month.

As a landlord would it make any financial sense to take this hit? No it doesn’t.I would rather let my property out to a family or professionals for the full 12 months.

So we could see a real crisis in the student accommodation market if landlords exit on mass (they already are). Let’s not forget not everyone can afford purpose built accommodation.

Cider Drinker

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9:27 AM, 21st September 2024, About 3 weeks ago

Reply to the comment left by Sam Smith at 20/09/2024 - 23:34
If the student only wants the accommodation for 8.5 months, why not offer a rent that makes it worth your while (that is, cram 11 months’ rent into 8.5 months).

Marlena Topple

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10:46 AM, 21st September 2024, About 3 weeks ago

They can leave after 2 months. What if they stay 11 months?

Cider Drinker

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14:35 PM, 21st September 2024, About 3 weeks ago

Every line of the Renters Rights Bill increases costs and risks for landlords and therefore, increase rents for tenants.

Even increasing the rent increases the risk for landlords and this too increases rents.

Now we have a budget to look forward to.

Disgrunteld Landlady

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19:44 PM, 22nd September 2024, About 2 weeks ago

Isn't rental insurance only allowable if student pass all the checks? Guarantors etc.. Many don't pass them.

I am signing all mine up on 12 month tenancies..

used to get rent 3 times a year when the loans came in.. well what was left of it after the Agent had gouged me and did nothing in return. They used to move them in without any rent paid to me until the loans came in, being in breach of their own AST's! TS1 if you want to know where.

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