The new Private Housing (Tenancies) Scotland Bill, currently being debated in the Scottish Parliament, threatens to break the student lettings system altogether. That’s according to Dan Cookson who is a spokesman for PRS 4 Scotland (Private Rented Sector in Scotland).
“It will require landlords to offer all tenants a single, open-ended Private Residential Tenancy, which means, at a stroke, they’ll no longer be able to offer a fixed term nine or ten month lease. Neither could landlords require students to vacate a property in the summer.”
First-year students usually take places in the university’s own halls of residence or in privately-run Purpose Built Student accommodation on nine or ten-month leases. In the second year most will then secure a house or flat share in the private rented sector (PRS) for the following September.
The summer break gives landlords time to refurbish the accommodation as necessary; it more often is necessary after a group or students have been in residence over the winter.
That’s been the system for many years in England, Wales and Scotland where student private rented properties are marketed by their private landlords early in the year, allowing students to secure a lease with friends gathered in their first year, well in advance of the summer examination period and the summer holidays.
Over half (54 per cent) of students who responding to a “Why Research” survey said they prefer to keep the current fixed term tenancies, while 89 per cent agree that there should be an option for a flexible or short-term tenancy agreed between landlord and tenant at the outset.
The Scottish Government has said that the student market will simply “adjust”?
Mr Cookson is calling for time to improve the legislation, which will come before MSPs again in February. “They must now consider proposals for a “student tenancy” that gives students what they want: all of the same rights as other PRS tenants under the bill while retaining the flexibility needed to make the student housing market work,” he says.
Housing minister Margaret Burgess has said:
“This bill is vital in helping to meet Scotland’s housing needs, and providing a modern tenancy that reflects the changes to the private rented sector in recent years.
“We are committed to ensuring every person in Scotland has a safe and warm place to stay, and achieving a sustainable, long-term solution to addressing housing affordability. The range of measures brought forward under this bill will ensure the sector is better managed, simplified and successful.
“We want to create a better, more professional private rented sector. This bill is absolutely key to achieving that.”
Tony Cain, policy manager for the Association of Local Authority Chief Housing Officers (ALACHO) says that “welcome as they are, the Scottish Government’s package of reforms to the Private Rented Sector (PRS) just don’t go far enough.”
Mr Cain has said that private renting is still seen as “something that home owners with a bit of spare cash may want to do in their spare time.”
Whilst he thinks there’s evidence of a cohort of professional landlords in the sector, “The [Bill’s] focus on minimising risks to landlords and investors means that business failures are underwritten by the public sector through the homelessness legislation.”
The best way, he thinks, to demonstrate this point, is to look at two of the proposed revised grounds for repossession:
Ground 1: that the landlord intends to sell the house;
Ground 2: that a lender wishes to sell the house because the landlord has broken a loan agreement.
Mr Cain thinks these provisions make homelessness an appropriate “management tool” to address business failure or change.
“These provisions ensure that private landlords or lenders can remove tenants when thing go wrong with the business or they want to disinvest. And most importantly, the value of the asset is protected by ensuring that it is linked directly the property values in owner occupation. It also means they can borrow more to invest and make bigger returns on capital values, “ Mr Cain says.
Accepting there is a “delicate balance” to be struck between the rights of private landlords letting own their own home and those of tenants; Mr Cain it seems, in effect is saying that all landlords who operate as an investment or a business should in fact become social landlords, giving their tenants same sort of security of tenure that a council or housing association tenant would get.
John Blackwood, chief executive of the Scottish Association of Landlords, has said he found there to be “a remarkable amount of common ground” throughout the development of the legislation but he has warned that measures “must not harm investment in the sector.”
He went on to say:
“We have particular concerns about measures such as rent controls, as well as removing the right of a landlord to end a lease naturally, subject to a reasonable notice period. Whilst we understand the political pressure to tackle rent rises in hotspots such as Aberdeen and Edinburgh, we are concerned these measures could harm investor confidence and drive landlords out of the market, leaving a vacuum that could be filled with less than scrupulous Landlords. The way to reduce rent levels in a sustainable manner is to increase housing supply, not punishing landlords that are investing tens of thousands of pounds in their properties.
“Similarly, the proposal to remove the right of a landlord to bring a tenancy to an end, subject to a reasonable notice period, will harm confidence amongst those looking to invest in the PRS, as well as making it harder for some groups to find rented accommodation. For example, many landlords split their properties between students and holiday lets, particularly in places like Edinburgh. Instead of providing housing to these two groups during the year, landlords may decide not to rent to students as they couldn’t guarantee that they would leave the property at the end of the academic year in time for visitors to the city. Instead they will take more traditional, longer-term tenants, reducing the supply available for students and visitors.
“We will be sharing our concerns with MSPs in the coming months and hope we can find solutions which ensures the final legislation strikes the right balance between protecting tenants and encouraging continued investment in the PRS.”
Dr John Boyle, spokesman for campaign group PRS 4 Scotland, commended the Scottish Government’s desire to create more secure tenancies but said the bill will “raise a number of alarm signals”.
“In particular, the focus on rent caps and a one-size fits all tenancy is likely to deter the investors the sector needs and the devil will be in the detail of the final legislation. What we need going forward is clarity on key questions,” he said.
“Already investors and landlords will be concerned that the bill leaves discretion for individual local authorities to set the level of rent caps, and this could lead to precisely the type of long term uncertainty that we know deters investment in housing stock. Moreover, with local authorities making decisions on rent controls based on average area wide prices, we risk deterring the types of high quality build to rent development that improves urban place making.
“Regrettably, the popular cry for rent controls has clouded the truth about the rental market. Rents are not universally going up; in former hot spots, such as Aberdeen, they are now decreasing. Where rents are rising, such as in Edinburgh, supply is tight and demand exceptionally high. The debate has been hampered by the lack of definitive data on Scotland’s PRS and this needs to be corrected before the bill progresses.
“Landlords and tenants in the student market will be particularly worried by the apparent removal of any ability for students to take a 10-month lease, and there will be a knock on negative effect on short term holiday lets too. It is clear that the intention of the Bill was not to hammer students and Edinburgh’s festivals as well as investors in student accommodation, but that is what is likely to happen. Other features, like the removal of no-fault possession, will need to be worked on further, both before the bill is passed, and through test cases of the Tribunal, which will need to be extremely well resourced from the outset.
“We remain encouraged that everyone can and will unite behind the desire to increase the supply of good quality housing for rent. The goals are the same, to create a sustainable PRS for all income groups, but evidence suggests that rent controls and limited choices for tenancies will not get us to where we want to be.”
Tenants’ bill puts student lettings in turmoil – https://t.co/ifPNrSzWND
— LandlordZONE (@LandlordZONE) January 25, 2016