Editor's note: This brief was summarised by The Property AI Newsroom from a report by The Negotiator. Read the original article for full details.

Student Lettings Sector Faces Challenges After Renters’ Rights Act

The student lettings market has been significantly affected by the Renters’ Rights Act, according to a report by The Negotiator. The Act has allowed students to end their rental contracts early this year, leading to widespread disruption for landlords and letting agents.

Most student rental contracts previously started in September and ran for 12 months. Due to the new legislation, many students have chosen to terminate their agreements early, resulting in empty properties over the summer months. This has left landlords without rental income during this period, which, according to the report, could eliminate any expected annual profit.

Letting agents are also impacted, as the absence of rent payments means they will not earn fees for up to three months. The report notes that few letting agents have a profit margin above 20%, so this loss of income could mean no profit for the year.

The article suggests that the issue may not recur next year, as contracts could be adjusted to start in June instead of September, or rents could increase to cover the anticipated summer void period. However, the report states that the legislation is expected to have a long-term impact on the student lettings market.

Some landlords may consider selling their properties or switching to letting to professional tenants. The report also notes a likely increase in purpose-built student accommodation, which is exempt from the new rules, but is generally more expensive than traditional student housing.

The Negotiator’s report concludes that while prices for student lettings businesses are currently down, letting agents are expected to adapt to the new legislation, and demand for student letting businesses may recover in the future.