The student HMO (House in Multiple Occupation) market is a vital component of the private rental sector in England, particularly in university cities where demand for affordable, shared housing is high. Unlike traditional private rentals, student HMOs typically operate on fixed-term tenancy agreements, ensuring landlords can secure occupancy for the full academic year. However, the Renters (Reform) Bill, currently progressing through Parliament, proposes significant changes to tenancy laws that could disrupt this model—most notably the abolition of fixed-term contracts in favour of rolling periodic tenancies.
If enacted, these reforms would allow tenants to leave at any time with just two months’ notice, posing substantial risks to landlords who rely on consistent rental income throughout the academic year. The uncertainty of mid-year vacancies could make it more challenging for landlords to sustain student HMOs, potentially leading to a shift in the market. Many landlords may reconsider investing in student accommodation, while others could convert their properties for professional tenants, who are generally seen as offering more stability.
The Scale of the HMO Market in England
As of 2023, there are approximately 476,000 registered HMOs in England, providing housing to a significant portion of students, young professionals, and low-income tenants. While HMOs cater to various demographics, students make up a major share, with around 70% of university students opting to live in shared accommodation rather than university halls or private flats.
The concentration of student HMOs is particularly high in university cities such as Manchester, Nottingham, Leeds, Bristol, and Birmingham, where purpose-built student accommodation (PBSA) is often more expensive. HMOs remain an attractive option for students due to their affordability, flexibility, and access to communal living spaces.
The Financial Model Behind Student HMOs
The traditional student rental model relies on fixed-term agreements, typically lasting 12 months from September to August, allowing landlords to:
Guarantee rental income for the entire academic year.
Minimise void periods by aligning contracts with university timetables.
Avoid mid-term tenant turnover, which can be costly and disruptive.
Under the current system, landlords market their properties in advance of the academic year, ensuring full occupancy before the start of term. This structure has provided stability for both students and landlords, reducing the risks associated with vacant periods. However, the proposed reforms under the Renters (Reform) Bill threaten to undermine this model, introducing new uncertainties that could make student HMOs less financially viable.
Why the Renters (Reform) Bill is a Concern for Student HMOs
If passed into law, the Renters (Reform) Bill will replace fixed-term student tenancies with open-ended periodic tenancies, meaning students could terminate their contracts at any point by giving just two months’ notice. While this reform aims to improve tenant flexibility and security, it presents major challenges for student landlords, who rely on structured rental periods to sustain their business model.
Key Changes in the Renters (Reform) Bill
The Renters (Reform) Bill is set to introduce sweeping changes to the private rental sector in England, fundamentally altering the relationship between landlords and tenants. With a focus on improving tenant security, affordability, and housing standards, the bill proposes several key reforms that will directly impact landlords operating student HMOs.
Abolition of Section 21 ‘No-Fault’ Evictions
One of the most significant changes in the bill is the abolition of Section 21 evictions, which currently allows landlords to remove tenants without providing a reason. Under the new legislation, landlords will only be able to repossess their properties by citing specific legal grounds, such as non-payment of rent, property damage, or a legitimate need to sell or move into the property themselves. This shift aims to provide greater stability for tenants, reducing the risk of sudden displacement and ensuring that evictions occur only when justified. While landlords will still be able to reclaim their properties under reasonable circumstances, the burden of proof will now rest on them, requiring a valid justification for eviction.
Introduction of Open-Ended Tenancies
A major transformation in tenancy agreements will see the end of fixed-term contracts, which are particularly common in student HMOs. The bill proposes that all tenancies become rolling periodic agreements, meaning tenants will no longer be locked into a contract for a set duration. Instead, they will have the flexibility to leave at any time by providing two months’ notice. This reform is intended to give tenants greater freedom and prevent them from being tied to a property they no longer wish to occupy. However, this also introduces potential challenges for landlords, particularly those in the student rental market, where properties are typically let on an academic-year basis.
Extended Notice Periods for Landlords
Under the current system, landlords can often regain possession of their property within a few months, particularly through Section 21 evictions. However, the Renters (Reform) Bill extends the minimum notice period for landlords seeking to repossess their properties to four months. This change is intended to give tenants more time to secure alternative accommodation and prevent abrupt evictions that could lead to housing insecurity. While exceptions will exist for serious cases, such as persistent rent arrears or anti-social behaviour, the general rule will require landlords to provide significantly more notice before reclaiming their property.
Limits on Rent Increases and Tenant Protections
Rent increases have been a growing concern in the private rental sector, with tenants often facing multiple hikes within a short period. The new legislation will limit rent increases to once per year, preventing landlords from imposing sudden or multiple rises within a short timeframe. Furthermore, tenants will have stronger rights to challenge rent increases, ensuring that landlords cannot raise rents arbitrarily or unfairly. By requiring landlords to provide clear justification for rent adjustments, the bill aims to promote affordability and prevent excessive rent inflation, particularly in high-demand rental markets.
Introduction of a New Property Ombudsman and Landlord Register
In an effort to enhance tenant protection and ensure higher standards in the rental sector, the government plans to introduce a Property Ombudsman. This independent body will act as a mediator, providing tenants with a formal mechanism to resolve disputes with landlords without the need for costly legal action. The introduction of this service is intended to improve accountability in the rental sector and ensure that tenant complaints are handled fairly and efficiently.
Additionally, a National Landlord Register will be established to increase transparency in the sector. This will require all landlords to register their rental properties, making it easier to track ownership and ensure compliance with legal requirements. The register will help local authorities enforce property standards more effectively, identifying landlords who fail to maintain their properties or comply with the new regulations.
Minimum Housing Standards and Stronger Tenant Rights
The bill also seeks to address substandard housing conditions by imposing stricter minimum property standards. Landlords will be required to meet higher safety and habitability requirements, ensuring that tenants live in well-maintained properties free from serious hazards such as damp, mould, and structural disrepair. These changes aim to raise the overall quality of rental accommodation, particularly in the HMO sector, where multiple tenants share communal facilities. By improving enforcement mechanisms and strengthening tenant rights, the government hopes to create a more stable and fair rental market.
Why This is a Concern for Student HMO Landlords
The Risk of Void Periods and Income Gaps
One of the most pressing concerns for student HMO landlords is the potential for increased void periods. Traditionally, student tenancies operate on fixed 12-month contracts, running from September to August in alignment with the academic calendar. This allows landlords to ensure a consistent stream of rental income, with properties pre-let well in advance of the new academic year.
Under the new reforms, tenants will be able to terminate their agreements at any time by providing two months’ notice, meaning landlords will no longer be guaranteed rent for the full academic year. If a student decides to leave in January or March, for example, the landlord may struggle to find a replacement, as most students secure their accommodation before the academic year begins. This could result in months of lost rental income before the next intake of students arrives in September.
Uncertainty in Financial Planning
The student HMO model relies on predictability, allowing landlords to plan financially with confidence. Fixed-term contracts ensure that rent is secured for a set period, covering mortgage repayments, maintenance costs, and other expenses. With the introduction of rolling periodic tenancies, landlords will face greater uncertainty, making it more difficult to project their income for the year ahead.
This unpredictability may also create financing challenges, particularly for landlords with mortgages on their HMO properties. Lenders often require proof of consistent rental income when assessing mortgage affordability, and the risk of mid-year vacancies could make it harder for landlords to secure competitive mortgage deals or refinancing options.
Difficulty in Re-Letting Mid-Year
Unlike professional tenants who may be looking for rental properties at any time of the year, student accommodation follows a strict seasonal cycle. Most students secure housing between January and May for the following academic year, leaving little demand for mid-year lets.
If a tenant decides to leave their student HMO property in the middle of the academic year, it is unlikely that another student will be looking for a short-term let until the next intake in September. This creates a scenario where landlords may be forced to accept short-term tenants or reduced rents, further impacting profitability.
Disruptions to Group Tenancies in HMOs
Student HMOs are typically let to groups of tenants, with contracts signed collectively for the entire property. When all tenants are bound by the same fixed-term contract, the risk of unexpected departures is minimised. However, under rolling periodic tenancies, individual students within an HMO will have the ability to leave at different times, potentially disrupting the entire group dynamic.
If one student moves out mid-term, the remaining tenants will either have to cover the additional rent or find a replacement themselves. In many cases, this may be difficult, leading to further voids or disputes between tenants and landlords. This scenario introduces additional administrative burdens for landlords, who may need to manage multiple tenancy agreements for the same property, rather than a single contract covering all tenants for a fixed period.
Potential Shift Away from Student Lets
Given the risks associated with uncertain tenancies, void periods, and financial unpredictability, some landlords may exit the student HMO market entirely. Instead, they may choose to convert their properties into professional HMOs, where tenants are less likely to leave at irregular times, or they may opt for single-family lets, where tenancy turnover is typically lower.
In cities with high student demand, this shift could reduce the availability of student rental properties, forcing more students into expensive purpose-built student accommodation (PBSA) or reducing housing options in key university areas. Some industry experts fear that if too many landlords exit the sector, rents could rise due to reduced supply, making student housing less affordable in the long term.
Calls for an Exemption for Student Lets
Recognising the risks posed by the Renters (Reform) Bill to student accommodation, industry groups such as the National Residential Landlords Association (NRLA) have been lobbying the government to grant an exemption for student tenancies. They argue that fixed-term contracts should be retained for students, given the seasonal nature of their accommodation needs and the financial planning required by landlords.
There has been some discussion around allowing universities and purpose-built student accommodation providers to continue using fixed-term contracts while excluding private landlords. However, this would create an unequal playing field, potentially pushing private landlords out of the student rental market altogether. At present, it remains unclear whether the government will adjust the bill to accommodate student landlords’ concerns before it is finalised.
Lessons from Wales and Scotland
Similar reforms have already been implemented in Wales and Scotland, providing valuable insights into how these changes may impact student landlords in England. Both countries have moved away from fixed-term tenancies, introducing rolling periodic contracts that offer greater flexibility for tenants. However, the consequences for landlords—particularly those operating student HMOs—have been significant, raising concerns about financial sustainability, market stability, and the long-term availability of student accommodation.
The Welsh Experience: Renting Homes (Wales) Act 2016
The Renting Homes (Wales) Act 2016, which came into effect in December 2022, introduced sweeping changes to the Welsh rental market. The law standardised tenancy agreements, introduced rolling periodic contracts, and required landlords to comply with stricter housing standards. The most significant change for student landlords was the removal of fixed-term tenancies, meaning that all tenants, including students, now have the right to end their tenancy with just 28 days’ notice after an initial six-month period.
For student HMOs, this change has led to increased uncertainty and higher vacancy rates. Many landlords have found it difficult to secure full-year occupancy, as students now have the option to leave at any point in the academic year. The traditional model—where landlords would let their properties from September to August to align with university terms—has been undermined, forcing landlords to rethink their letting strategies.
To mitigate these challenges, some landlords in Wales have required guarantors, increased security deposits, or worked more closely with universities to secure tenants through nomination agreements. Others have opted to leave the student rental market altogether, converting properties into professional HMOs or single-family lets. The overall effect has been a reduction in available student housing, particularly in high-demand areas such as Cardiff and Swansea, where many landlords have deemed the risk of void periods too high.
Scotland’s Private Residential Tenancies
Scotland implemented similar reforms even earlier, with the Private Housing (Tenancies) (Scotland) Act 2016 coming into force in December 2017. This law abolished fixed-term tenancies and replaced them with Private Residential Tenancies (PRTs), allowing tenants to leave at any time with just 28 days’ notice. Initially designed to give tenants greater flexibility, the policy has led to serious challenges for student landlords, many of whom have struggled to maintain full-year occupancy.
One of the biggest unintended consequences in Scotland has been the destabilisation of the student HMO market. Many landlords, wary of mid-year voids, have withdrawn from the student sector and converted their properties into professional lets instead. As a result, students in cities such as Edinburgh, Glasgow, and Dundee have faced reduced supply of affordable rental properties, leading to increased competition and higher rents.
The problem has been particularly acute in cities with a high number of students and a shortage of rental accommodation. With fewer private landlords willing to take on student tenants, many students have been left with little choice but to rent in expensive purpose-built student accommodation (PBSA) or search for short-term lets at inflated prices.
In response to growing concerns, the Scottish Government has been under pressure to reconsider aspects of the reform for student tenancies. However, no exemptions have been made, and student landlords continue to face the same challenges posed by open-ended tenancy agreements.
When Will These Changes Take Effect?
The Renters (Reform) Bill is currently making its way through Parliament and is expected to become law in mid-to-late 2025. However, while the bill is progressing, there are still uncertainties around the exact timeline for implementation, as well as potential amendments that could be introduced before the final version of the legislation is passed.
Current Status of the Renters (Reform) Bill
The bill was first introduced in Parliament in May 2023, following years of consultation and debate about the need for reform in the private rental sector. After its introduction, it went through multiple stages of scrutiny in the House of Commons, where MPs debated key aspects of the proposed legislation, including the removal of fixed-term tenancies, the abolition of Section 21 ‘no-fault’ evictions, and the introduction of rolling periodic agreements
By January 2025, the bill had passed its third reading in the House of Commons and moved to the House of Lords, where further scrutiny and possible amendments were considered. The second reading in the Lords took place in February 2025, where significant concerns were raised about its impact on student landlords and the broader private rental market. However, despite opposition from some landlord organisations and industry bodies, the bill remains on track to progress towards Royal Assent later in 2025.
Expected Implementation Timeline
Once the bill receives Royal Assent, it will officially become law, but implementation will not be immediate. The government has indicated that there will be a phased introduction of the new rules, giving landlords and tenants time to adjust.
The most likely scenario is that different parts of the bill will come into effect at different times, similar to how previous housing legislation has been introduced. Key provisions such as the abolition of Section 21 evictions and the requirement for periodic tenancies could be enforced in late 2025 or early 2026, while other measures, such as the establishment of a national landlord register, may take longer to implement due to administrative requirements.
Transitional Period for Landlords
The government has acknowledged that landlords will need time to adjust to the new rules. While an exact transitional period has not yet been confirmed, it is likely that landlords with existing fixed-term tenancy agreements will be allowed to continue them until they expire, rather than being forced to immediately switch to periodic contracts. However, once a fixed-term tenancy ends, it is expected that it will automatically convert into a rolling periodic tenancy under the new regulations.
This means that student landlords who sign tenancy agreements for the 2024–2025 academic year should be able to complete the full term of those contracts without any disruption. However, from September 2025 onwards, new tenancies will likely need to comply with the new rules, meaning that landlords will no longer be able to guarantee a full 12-month occupancy period.
Key Dates to Watch
Mid-2025: The Renters (Reform) Bill expected to receive Royal Assent, officially becoming law.
Late 2025: Initial implementation phase begins, likely including the abolition of fixed-term tenancies and Section 21 evictions.
Early 2026: Full enforcement of key provisions, with all new tenancy agreements expected to comply with rolling periodic contract rules.
Beyond 2026: Further developments, including the potential introduction of a National Landlord Register and a Property Ombudsman Scheme.
