To date a private sector landlord renting a property to students has been a relatively safe and secure investment. The tenancy is fixed for 12 months and parents usually guarantee the tenant obligations. Obviously, there are other costs and risks involved but the basic business model should be profitable, albeit less so now than say 20 years ago as there have been numerous legislative changes to the private rental service that has increased costs to landlords over the years. This article does not explore the rights and wrongs of those changes but simply asks whether the pending removal of the fixed term regime will result in a significant number of private sector landlords leaving the market, and if so, what are the consequences. It is crystal ball gazing.
The obvious issues from a landlord's perspective is an increased risk that the tenant will serve notice to quit to expire shortly after their exams. I suspect it will almost be automatic for final year students but also a risk with first and second year students. As a result, the property could become vacant in June and not be relet until the Autumn. This leaves 4 months when the property might be empty.
While some may argue the property can be let as holiday accommodation, such as Airbnb, over the summer I very much doubt this is feasible when you consider the need to provide a fully furnished property with all the usual bells and whistles that are required for the short term let. Further, the likely location will not, in most cases, be attractive for holiday makers. In addition, the landlord will not know if the property is going to be empty during these months until the tenant serves notice. The landlord will then only have one months' notice to advertise the property as available to secure the bookings and will have to carry out the necessary works after the tenant has left (assuming they leave on or before the date in the notice - another risk to the landlord) but before the first holiday maker arrives. In short this is going to be wholly impractical. The reality is that these properties will remain empty during these months.
It is not just the loss of rental income for a third of the year, but also the council tax burden that would come into effect. This could be at 200% of the standard council tax so the sums involved are material and, along with insurance and repairs and other costs, will certainly curtail any profit being made.
I suggest this single issue will increase the likelihood a landlord will decide to leave the market and the volume of accommodation available to students will reduce leaving students scrabbling for accommodation. With ever increasing student numbers this will increase the probability that many will not find suitable accommodation. The usual economic rule in the case of a diminishing supply with no change in demand is that the price goes up; thus increasing costs for the student. This is an avoidable problem if an exception to the no fixed term tenancy law is made for lettings to students.
This is even before we start to consider the possibility of a wealth tax or national insurance being taxed on the rental income. For landlords owning a 4 bedroom house in many university towns the value of the house will easily exceed £500,000 and will be another cost on top of the rent void and the additional council tax. If national insurance is applied to the profits the tax yield may fall well short of government expectations and the tax that is taken will simply be further justification for landlords to leave the market. If it is taxed on the gross income (perhaps not a completely unrealistic prospect) the economic case for letting to students will become very difficult to argue.
Against this background it is reasonable to assume a significant number of small landlords (ie those not operating large HMO's) will leave the market over the next few years meaning less choice for students and, quite probably, more expensive rents.
Of course, the house will not disappear as it will either be let on the normal rental market or sold for the buyer to live in. What will be lost is accommodation available to students. The question is then whether the corporates and cash strapped universities will build enough bespoke student accommodation to compensate for these losses and how will they price in the void periods?
This note is based on the consolidated Bill as amended on report published on 15 July 2025. As the Bill has yet to receive Royal Asset, its provisions may be subject to change.