What are the implications of the Renters' Rights Bill on the student and build-to-rent sectors in England?

Osborne Clarke hosted a roundtable discussion with senior figures from major landlords and operators in the student and build-to-rent (BTR) sectors, including Greystar, Related Argent, Yugo and Packaged Living, to discuss the implications of the upcoming Renter's Rights Bill, which is currently at the committee stage following its second reading in the House of Lords on 4 February 2025.

The session provided an open forum for attendees to share their thoughts about the bill's key provisions, which include the abolition of fixed terms, the removal of contractual rent reviews in favour of a tribunal-led process, a cap on the amount of rent payable in advance of entering into a tenancy agreement (to be limited to one month under the current terms of the bill), and the current proposed exemption for purpose-built student accommodation (PBSA).

Looking to Europe

Nick Whitten, the Head of Living Research & Strategy – EMEA at JLL, provided some context on rental regulations across Europe, in comparison with the bill's proposals targeting rentals in England (only). Several attendees had experience managing rental properties in other European jurisdictions, noting that England's residential rental market is relatively light on regulation compared with other European countries, such as the Nordic nations (which have more stringent regulations but also proportionally higher annual new supply levels).

Practical concerns

Several practical concerns were raised by industry attendees, including:

• Managing tenant turnover without the certainty of a fixed term could be difficult, in particular in light of the risk of tenants "concession hopping", and changing properties regularly.
• The cap on rent payable in advance gives rise to concerns about how tenancies could be granted to students and international tenants in practice. Often advance payments are used where tenants are not otherwise able to show they meet affordability criteria.
• The likelihood of delays and resourcing issues affecting the tribunal process for rent reviews is also a concern. In addition, there could be a lack of certainty as to future income. As there is no downside for them, tenants may be expected to frequently challenge proposed rent increases, with the tribunal being limited to reducing the rent. Additionally, the date of any rent increase would be delayed until the date of the tribunal's determination (or two months thereafter).
• There may be an increasing need for guarantors to be provided, with the combination of banning lump-sum rent payments in advance and fixed terms. However, guarantors may be less willing to sign up to an open ended contract or overseas tenants may not be able to secure a UK guarantor.
• A lack of clarity around how PBSA will be defined means there is uncertainty about what would happen to students currently living in multi-family accommodation.
• Potential issues are foreseen with court resources to quickly and effectively manage possession claims where tenants are in breach, combined with the extended notice periods before landlords can take action.

Many of these concerns would have an impact on letting strategies, particularly in relation to tenant mix, certainty of forecasting and any concession offering. Attendees commented that there may be change in behaviour in the market as a result – both in the short term as a protective measure until more is known about the bill's implementation and in the mid- to longer term as the impact of the measures are better understood.

The importance of clear and certain regulations

Industry specialists emphasised the importance of clear and stable regulations to maintain market stability and investor confidence, noting that frequent regulatory changes can negatively impact asset valuation and investment. The Irish market was used as an example, where there has been a succession of regulatory changes in a relatively short timeframe.

The consensus view was that there was a lot of change for the industry to absorb, and that it could take a few years for the market to settle again.

Preparing for change

A number of strategies were proposed for how to prepare for the implementation of the bill (which is expected to receive Royal Assent by autumn 2025). These included amending how concessions are offered to encourage longer tenancies, and ensuring that professionally managed developments continue to offer tenants more than simply a property (again to encourage tenants to stay for longer periods).

Attendees also indicated they are planning to front load the process by strengthening their referencing requirements. For student accommodation, there is a possibility of working in partnership with local universities in order to find a way to accommodate international students who might otherwise struggle with affordability.

Looking to the future

The event closed on a positive note; attendees agreed that the industry had weathered similar regulatory changes in other jurisdictions, and had found ways to work within them.

The consensus was that the changes would have an impact in the short-term, but once time and practice had brought clarity to the regulatory position, the industry would recover and continue to thrive.