Elizabeth Fevyer and Joe Geen consider the extent to which the Renting Homes (Wales) Act 2016 may prove challenging for the student lettings regime in Wales.
On 1 December 2022, the Welsh residential sector was turned upside down when the Renting Homes (Wales) Act 2016 came into force. With the noble aim of striking a fairer balance between residential landlords and occupiers, the 2016 Act and subsequent Welsh government publications have taken a broad brush approach to a sector that is filled with nuances and sub-sectors.
Notably – and in contrast to the previous legal position – neither university accommodation or purpose-built student accommodation has been recognised as a distinct sub-sector with differing needs to the mainstream residential sector.
As we move towards the end of the first academic year in which this new regime has operated, student accommodation providers are likely to become more aware of the changes effected by the legislation for this specific sector and its shortcomings.
So what are the main questions universities and private providers in the PBSA sector will be asking themselves?
Is the new regime different for private providers and universities?
Both universities and private PBSA providers are bound by the new legislation but the impact will be felt differently by them. Private providers and universities both accommodate young people with limited experience of living away from home. Universities, however, are in the position of having educational, residential and pastoral responsibilities towards their students.
Ensuring their occupation contracts dovetail with the student contract and their internal policies and procedures, in particular around discipline and safeguarding, is key to universities fulfilling their wider obligations. There are a number of areas in which the 2016 Act makes it considerably harder for them to do this.
Previously, the unique nature of student accommodation within the residential sector was recognised by a carve-out under the Housing Act 1988. This gave Welsh universities (and in certain circumstances private providers), the flexibility to issue licences, rather than assured shorthold tenancies, to students.
The main advantage of issuing licences was the flexibility they provided in terms of termination, eviction and relocation. Although licences still exist under the 2016 Act, the effect of the new legislation is to bring them under the same umbrella as other residential tenancies, drastically limiting the ability to relocate contract holders to alternative accommodation and creating a new process for terminating contracts and evicting students.
Can I use my old terms and conditions?
Many providers will have been using licences that have been refined over time, reacting to unique scenarios which can arise in the sector, with the benefit of years of experience. The new legislation lays out various standards that must be met in any contracts between owners and occupiers. The legislation is also clear that if there is any conflict between the terms of any occupation contract and the 2016 Act, understandably, the latter will prevail.
Providers can carry out line-by-line reviews of their old terms and conditions to assess if they conflict with the 2016 Act. However, undoubtedly there will be many points where there is at least a risk of conflict, so the value of trying to tweak the old terms and conditions quickly is lost in favour of an overhaul.
The Welsh government has helpfully provided model occupation contracts and, in most cases, it will be more appropriate for providers of student accommodation to adapt these for use.
Can I vary the model contract terms?
There are two noticeable downsides to the model terms for student accommodation providers. First, there is no specific set of model terms for student accommodation, which means they do not reflect the unique sphere universities and private providers operate in. The model terms are designed to be used across all residential accommodation settings. Secondly, while the model terms have been designed to be user and consumer friendly, their wording, structure and effect can lead to confusion and a distinct lack of clarity for students.
Providers of student accommodation will want to vary many of these terms to make them relevant to the student accommodation setting. The new regime does not make this process easy. The model contracts contain certain fundamental terms which cannot be varied and others which can be varied (but only where to do so would benefit the occupiers). While there are supplemental terms, which can be varied in all cases, and additional terms, which can be bespoke to the provider and setting, these all carry the warning that they cannot be varied in a way which would conflict with the fundamental terms and provisions of the 2016 Act. Provider-perspective aside, even a well-informed occupier would be forgiven for finding this quagmire of categories confusing.
Can I allocate rooms the way I used to?
Managing an influx of thousands of students at once is a huge undertaking. Many universities and private providers release only limited blocks of rooms at a time and only definitively confirm room allocations close to the start of term. This allows providers to consolidate groups of bookings rather than be left with numerous floors or buildings where there are voids.
The workings of the 2016 Act frustrate these established processes and require providers to either lock students (and room allocations) in early or risk starting the year with a number of voids and a reduction in income. Few organisations have been saved from the economic turmoil of recent years but, for universities who rely heavily on income through accommodation, this could pose a serious risk.
Can I move students around?
This is an important question for all providers, but especially universities.
Whether arising from something as simple as personality clashes or something more serious such as mental health issues, the ability to relocate students is an essential part of the management of student accommodation. Before the 2016 Act, the use of licences made this possible and gave universities the flexibility to fulfil their wider function in pastoral and disciplinary matters, as well as accommodating students’ preferences.
Under the new regime, short of seeking to terminate the occupation contract, the occupier can only be relocated with their consent (or if limited estate management grounds apply). This lack of flexibility for landlords may make sense in a normal residential letting context. With student accommodation, however, this restricts the essential ability of universities to manage and fulfil their wider duties.
What if I have problems getting someone out?
The cyclical nature of the academic year means students typically arrive in September and leave in the summer. Providers then have time to review, repair and prepare for the incoming cohort.
Under the 2016 Act, if any occupier refuses to leave at the end of term, it may be months before the provider can regain possession of the unit. With a residential property housing one or a small group of occupiers, this can be a real inconvenience.
The problem for student accommodation providers is not merely one of inconvenience, but of managing the process of welcoming and accommodating potentially thousands of new students when the new academic year starts a few months later.
Providers recognise the importance of strong occupier protections, but the imbalance between the needs of in-situ students and those arriving in September shows a lack of nuance in reflecting how the sector operates.
Concluding thoughts
As part of an equivalent consultation in England, the UK government decided student accommodation remains a special case with different needs. The rationale for this was that the occupiers of PBSA and university accommodation have differing expectations to most other residential occupiers and the providers are signed up to numerous codes of practice which ensure quality of standards.
The Welsh government’s desire to ensure the presence of sufficient tenant protections in the residential landlord and tenant sector is to be lauded. However, in the case of PBSA and university student accommodation, these intentions may result in unintended consequences. To fully meet the needs of the student accommodation sector, a balance will need to be struck between the requirements of the 2016 Act and the flexibility that student accommodation providers need in order to address their responsibilities to students.
As we approach the end of the first academic year in which the 2016 Act has been in force, this balance remains to be struck. Experience, dynamism and pragmatic evolution of this new regime will be key to ensure that students as learners, tenants and citizens are protected and allowed to flourish in Wales and that student accommodation providers can give them the best experience.
Key legislation dates
18 January 2016 Renting Homes (Wales) Act 2016 receives royal assent
15 July 2022 Earlier proposed date for the majority of the provisions to come into force
1 December 2022 The date most of the provisions did come into force
Key changes to student accommodation contracts
- All student accommodation contracts in Wales will fall under the new regime. There is no exemption for eg university accommodation
- Certain terms will be implied into all occupation contracts. Others can be changed and made bespoke (provided they do not conflict with the fundamental terms):
i) Fundamental terms – some cannot be changed, some can be changed by agreement and where the change benefits the contract-holder
ii) Supplemental terms – the parties can agree to change them or leave them out entirely
iii) Additional terms – the parties can agree to include them
- Occupation contracts can be either fixed-term or periodic
- If students remain in occupation at the end of a fixed-term, the contract automatically becomes periodic
- The new regime introduces a new process for eviction
- The Welsh government has produced template occupation contracts for use across most residential settings
Elizabeth Fevyer is legal director and Joe Geen is senior associate professional support lawyer at Eversheds Sutherland
