Students and the Renters (Reform) Bill: the government has listened but it needs to listen some more, part II

• This blog was kindly authored by Martin Blakey, former CEO of Unipol, a student housing charity.
• This blog is the second part of two on the Renters (Reform) Bill. The first part was published yesterday and discussed how the Bill will require students to be ‘joint tenants’ to be treated differently from students in other sectors. That blog can be read here.

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Here are a few downsides to joint tenancies for students, and why I consider they should not be compulsory.

1. True joint tenancies are quite difficult to set up in the context of a shared student house.  Each occupier needs to have exactly the same interest in the property and commit to take the tenancy at the same time.  This can be difficult to manage at the outset, but it becomes difficult to maintain as soon as any one of the occupiers wants to leave mid-tenancy. The potential is there for a significant number of disputes about what a joint tenancy is and whether one was achieved in the case in question.
2. Even if a tenancy is not a joint tenancy in the technical legal sense, it may still be the result of a tenancy agreement which explicitly makes the tenants jointly and individually liable. In that case, as long as the agreement is in good faith and uses intelligible language, the occupiers will be liable to pay a single rent for the entire dwelling. Although students may think they are being charged a proportion of the total rent (for their room and a contribution to shared facilities) in fact collectively and individually, they are liable for the entire rent for the dwelling.
3. Most of the tenancies that are loosely called “joint tenancies” are likely to fail to meet the legal requirements of a joint tenancy that are necessary to be able to evict a whole household on the same grounds in a single set of legal proceedings. 
4. A true joint tenancy (as opposed to a contract that imposes joint and several financial liability without satisfying other technicalities) is a single legal estate in land. Only 4 persons can hold a legal estate. Other parties to the contract have an equitable interest only (based on fairness), with the first named 4 tenants holding the tenancy on trust for the beneficial tenants. This is a technicality that disproportionally affects student households as they frequently comprise more than 4 persons.
5. When (as is commonly the case) some rooms in an off-street property are larger or have other benefits than others, each occupier may contribute a different amount towards the rent for the whole dwelling.  Indeed, the landlord or agent may suggest what proportions each occupier should contribute, but that should be taken as purely indicative.  Unequal contributions are not necessarily a barrier to occupiers being jointly and individually liable for the whole. In the event of default the landlord can (and frequently does) seek to recover monies from any tenant that is party to the agreement.  Ironically, it can be the occupier of the smallest room who ends up having to pay the most.
6. UK students who share with students from outside the UK are potentially disadvantaged, because it will usually be simpler, cheaper and more successful for a landlord to find and sue someone living in the UK than to obtain money from someone who is outside the jurisdiction. 
7. Joint and several liability is capable of extending to guarantors.   If a guarantor guarantees their son or daughter’s liability for the property or the tenancy, then the guarantor is guaranteeing a liability that is itself joint and several.  As the son or daughter can be held liable for the whole dwelling, so can the guarantor – unless the guarantor takes steps to limit the extent of the guarantee by specifying that they are only liable for a proportion of the whole and/or a specified maximum sum and/or they cannot be held liable for that proportion to the extent their son or daughter has already contributed.   It doesn’t seem fair, and it isn’t – but it is the law. Landlords can (and do) seek to recover lost monies from the parents most likely to pay it.
8. It is a feature of a joint tenancy that any one of the individuals comprising the joint tenant can give notice to quit a periodic tenancy.  There is no need for consensus among the joint tenants.  The situation rarely arises at present, because so few student tenancies are periodic (ongoing, rather than fixed-term) in nature.  If student tenants of off-street properties are treated like any other tenant under the Renters (Reform) Act, then periodic tenancies will be the norm. It is probably fair to say that, among student groups, the situation where one person wants to end the tenancy before the others is more likely to occur than it would in groups who are planning to live together for longer or for life – say an established couple.  Thus, termination of a tenancy by just one of the people comprising the tenant is more likely to affect students than others. If one of the joint student tenants gives notice to quit, this will leave the rest of the group unsure of their rights and obligations – once they find out that notice to quit has been given, that is.
9. If a joint tenant gives notice to quit, all the occupiers should vacate the property on or before the notice expires, unless those who want to stay agree a new tenancy with the landlord. If no new tenancy is agreed and anyone remains in occupation after the notice expires, those remaining in occupation are (under current law) potentially trespassers liable to pay mesne profits for the use of the property or even double the rental value of the property. Under current law, the landlord cannot evict the remaining occupiers without due process of law (obtaining and then enforcing a court order) but the cost will inevitably be passed on to the former tenants. And remember – they are jointly and individually liable for all those costs.
10. It goes without saying that under a joint contract, if a tenant leaves and stops paying rent (without giving notice to quit) then the landlord will ask those who remain to pay the rental shortfall.   If they are not able to pay, then the landlord is likely to sue for the shortfall and/or claim possession on the grounds of serious rent arrears.  Students can be left homeless and with county court judgements against them even when they have paid their “share” of the rent.
11. It is very difficult to change joint contracts to meet changes in an individual’s circumstances.  Various things could happen if a student wants to leave mid-year and someone else is available to take their place.    To set things back on a regular footing, the old contract will need to be ended and replaced with a new one; or the outgoing student and the remaining students will have to assign the tenancy to the incoming student and the remaining students.  Both procedures involve all the original joint tenants and is legally and administratively complex.  When there is a change part-way through the academic year, there are other complications such as whether the incoming tenant should be liable for any damage done before the change-over and dealing with the share of the deposit paid by the leaving tenant.
12. If a student simply leaves the property and cannot be contacted (not an uncommon event), the state of limbo may be forced to continue for some time.  The default position will be that the tenancy continues.  If the remaining occupiers are happy to pay the full rent and are generally looking after the property, the landlord is unlikely to take any action and would have no grounds to do so.  If the tenant who vacated returns whilst the tenancy continues, neither the remaining occupiers nor the landlord could lawfully exclude him/her. If the remaining occupiers are unwilling or unable to pay the full rent, the sensible thing would be to give notice to quit (if the tenancy is periodic).  If the absent tenant cannot be contacted, the remaining tenants cannot agree with the landlord to surrender (give up) or assign (transfer) their tenancy.  Unlike a notice to quit, surrenders and assignments require the participation of all the joint tenants. 

Sounds complicated?  It is! Unless landlords’ and student tenants’ rights and obligations are clear and accessible, few are likely to comply. Disputes will emerge – and disputes are never productive.

So, why is the government adopting the joint tenancy approach? The government says that this enables “landlords to evict households of full-time students only” as a single group.  They are avoiding the circumstance where a landlord may wish to evict one or more tenants but not all of them. For example, if one of joint tenants was causing problems through their anti-social behaviour (which elsewhere the Bill is keen to respond to) the only lawful way to evict them would be for the landlord to take possession proceedings against the entire household. If successful, the (joint) tenant would be liable to pay the landlord’s costs. As a result of joint and several liability, it is not necessarily the “problem” tenant who would end up footing the bill. The government is also avoiding the circumstance where one student, unbeknown to the rest of the group, terminates the joint tenancy by giving notice to quit.  Both are interesting examples of a government trying to come up with selective reasons for taking a particular approach whilst taking no notice of other consequences.

The government’s view is that“we understand most students living in HMOs will do so under joint tenancies”. Whilst it is true that the majority of students in the private off-street sector do rent on a form of joint contract, over the last few years, many of the better off-street student accommodation providers have been moving towards individual contracts and there is now a sizeable minority of students who rent on individual contracts. Like students in purpose-built student accommodation (PBSA), where individual contracts are the norm, students on individual off-street property contracts are solely liable for the study-bedroom they occupy and have joint liability for the shared areas within their houses or flats. Providers of PBSA hardly ever use joint contracts. The exception is family accommodation, where joint contracts for couples are sometimes used.

Legal complexities aside, the government should not be promoting, indeed insisting on the use of, joint tenancies under the guise of improving students’ rights.

It is not an improvement to deny students the option of having their own tenancy when renting a room in an off-street property. It is of note that there seems to have been no discussion of this criteria with any educational sector body or by the Bill Committee. Perhaps the only party consulted would be the NRLA and, unsurprisingly, landlords like joint contracts as it leaves them holding the whip hand.

It is not too strong to say that this proposed insistence on joint tenancies will cause many students to have fewer rights than they do now – even taking into account all the things they might gain elsewhere under the proposed Act.

The Way Forward

The government has accepted that off-street student housing needs some level of protection. The recent amendment was an attempt to resolve that issue, but, as has been demonstrated above, the suggested route forward causes more problems than it solves. It will result in removing existing legal protections from significant number of students who currently rent using individual contracts. 

A better way forward would be to pick up the original suggestion of all the educational sector bodies and allow students in off-street houses to have fixed-term contracts. If necessary, this could be restricted to HMOs which would cover the bulk of student shared housing. Landlords and tenants could still agree a periodic tenancy, as they can now, if that is what they wish to do. The fact that so few landlords and student tenants do agree a contractual periodic tenancy, and so few student tenants hold over and become statutory periodic tenants speaks for itself. The periodic tenancy is not suited to maintaining the academic cycle.

The government says that PBSA is covered by their approved National Codes which offer students additional protections whereas off-street properties are not. If the government wants to promote better student housing standards, it could work with interested parties to create a new National Code for off-street housing and then allow those who joined such a Code to continue to use fixed-term tenancies and/or individual tenancies.

The development of such a Code is possible and there are many local authority-approved accreditation schemes that would act as a good basis for the development of such a National Code. There is already a record of what existing schemes could be absorbed into such an initiative.  The Accreditation Network UK already administers two of the three approved codes of practice under the Housing Act 2004 and has demonstrated that it is possible to create a robust and verification-led Code that would be sustainably funded by its landlord members.

It is estimated that it would take three years to put such a Code into place and have compliant landlords join. This would build on the LUHC Committee’s recommendation that “The government should retain fixed-term tenancies in the entire student housing sector but require all landlords letting to students to sign up to one of the existing government-approved codes of conduct.” and would see a bespoke Code, of particular relevance to off-street student housing, being developed. After the lead-in period of three years, as in the case of PBSA, those who did not join the Code would lose their right to offer fixed-term tenancies.

Such a bespoke Code could also be used to improve landlord training, interface efficiently with local licensing standards, improve communication with local educational institutions and ensure more transparent and effective communication of particular relevance to student tenants. In this way standards (not just property-related standards) in the student off-street market would be improved.

The government says it does not want to treat students as second-class citizens but its current proposals risk treating them as third-class citizens. The government should think again and be bolder. 

In conclusion:

1. Retain the choice between a joint tenancy and an individual one – possibly make joint tenancies accessible only to landlords who have signed up to a government-approved code of practice.
2. Retain the choice between a fixed term and a periodic contract – possibly make fixed-term tenancies accessible only to landlords who have signed up to a government-approved code of practice.
3. Add a ground for possession that applies only to homes that were let to tenants who were pursuing or intending to pursue a course of study at a specified educational establishment. It would need to be a mandatory ground and it would need to be achievable in short time – between the landlord realising that the former students have no intention to vacate and the date on which the new tenant is due to take possession. Otherwise, vacant possession will not be achieved in time for the start of the academic year and the property is then likely to be let to non-students and fall outside the academic cycle forever.