On 3rd October 2019 Unipol announced that, following a significant number of late student residential buildings affecting students moving in this academic year, it was conducting an investigation to ensure that where members have a late building they have complied with the requirements of the Code. The investigation was undertaken by Ms Elizabeth Goddard and is reported here.

National Code Late Buildings Investigation 2019

The investigation looked into compliance under the Codes but in addition requested information about any inconvenience payments or additional assistance that the providers had made available to the tenants.  In respect of the latter, the relationship between the developer, building contractors and management provider varied between the residences and to some extent this influenced the responses to the late buildings.  

16 providers were investigated covering 26 residences.

Fifteen providers were members of The National Code of Standards for Larger Developments for Student Accommodation NOT managed and controlled by educational establishments and one was a member of The National Code of Standards for Larger Developments for student Accommodation managed and controlled by educational establishments. The investigation did not cover buildings covered by the Student Accommodation Code operated for HEIs by UUK although there were a number of late buildings that fell under that Code.

4 providers had 2 late buildings, 1 provider had 7 late buildings and the remaining 11 providers had one late building each.

The investigator requested information detailing from relevant Code members detailing:

• the size of the property
• how many tenancies were affected
• when the delay was notified by the contractor to the manager
• what actions were subsequently taken - including when the students were informed and details of the alternative accommodation provided
• correspondence sent to students.

Compliance with the Code

8 of the 15 providers fully complied with the Codes.

8 providers did not fully comply with the Codes

Non-Compliance.

3.7 The provider will also notify the National Code Administrator of this within one working day of the tenants having been notified, and what action they will be taking in respect of this;

6 providers did not comply with this.  However the residences were in the process of being inspected by the National Code verifiers and the delays were communicated to them.  This is still not compliant with the Codes as it is not the verifiers’ responsibility to pass this information on nor the National Codes Administrator’s responsibility to then confirm this with the provider.

In one case a decision had been made not to fully market or occupy all the building and therefore the building was not late.  However this should have been reported to the National Code Administrator if not as a late building then as a change to the size and perhaps amenities of the building, section 1.3 of the Code All changes of operational management of buildings will be reported to the NCA within 5 days of the change of management by the new operator.

3.7 Where a building is new, or undergoing refurbishment and the building programme is running late and where this may result in pre-let rooms not being ready for occupancy, the manager informs the future tenant at the earliest possibility of this likelihood, its possible consequences for them and from whom at the provider they can access help with this matter.

2 providers did not do this. 

It appears that “at the earliest opportunity” is a judgment call that some members do not have a clear interpretation of. The impact of providing information to tenants, not “at the earliest opportunity” was lessened only where there was availability of alternative accommodation (and effective communication to tenants once non-occupancy was known).  Often, where accommodation supply was tight, at this stage in the year tenants were left with few if any choices.

The investigator found that the providers who knew there were likely to be delays held off telling tenants until they were able to state that the building was definitely going to be late, when the building was likely to be ready and what alternative arrangements had been made.  Although this appears to be a reasonable approach, it is unlikely that building contractors make up lost time and it means that, from the tenants’ perspective everything is done at the last minute

Some providers are not involved in the development process they simply take on the building from a specified date.  They are therefore at the mercy of the contractor and the contractor’s prognosis of completion.  The providers who dealt with this most successfully were those that were pessimistic about the handover dates and who made longer term contingency arrangements.

The majority of providers did stop marketing the residences when they were aware of the delays which reduced the impact but most were fully let by that time.

When providers did contact students they requested that the tenants delay their arrival where they could and alternative accommodation details were provided.

Other Areas of Possible Non-Compliance

3.9 If the substitute room does not have access to appropriate self-catering facilities, or if the original rooms were to be associated with a ‘catering package’, then an appropriate meal service, or meal allowance, will be provided at a cost which does not exceed the original costs

One member provided a microwave to those tenants in temporary hotel accommodation rather than monetary assistance. This was not considered compliant with the Code.

3.8 In the event that a room is not ready for occupation on the date that the tenancy begins then a suitable alternative room is provided in an adjacent building or, in any event, in a building as close as possible to the original development;

All but 3 of the providers were able to make direct alternative accommodation arrangements.  In all cases tenants were referred to alternative sources of accommodation. There was some reluctance on the part of some PBSAs to enter into short term arrangements as the providers still hoped to find tenants who wanted full term tenancies.  It was noted that in many cities the co-operation between the PBSAs was good.

There is a big difference between providing accommodation for short period of time, say up to 6 weeks and longer period of time.  In many cases where the building was significantly late (November/December) providers allowed the tenants to terminate their tenancy agreements. 

The investigator found that the success of the providers in sourcing alternative accommodation was largely reliant on the other PBSAs willingness to accept short term bookings.  The accommodation and facilities, when provided, were largely the same as the original tenancies and met students’ expectations. 

Where there was a shortage of such accommodation tenants were found hotel accommodation. 

Unilateral changes to tenancy agreements

2 providers changed the start dates of the tenancy agreement by one week.

2 providers terminated tenancy agreements having made efforts to provide information about alternative accommodations.  Both paid inconvenience payments to the tenants.

3.9 Where rooms are not ready for occupation as described in 3.8 above the following provisions are made as a minimum to ensure that tenants are not disadvantaged:  - No rent is payable for the rooms which are unavailable until the date of actual occupation; - Where a substitute room is occupied an appropriate rent may be charged but the level of rent for the substitute room will not be higher than the original rent;  - If the substitute room does not have access to appropriate self-catering facilities, or if the original rooms were to be associated with a ‘catering package’, then an appropriate meal service, or meal allowance, will be provided at a cost which does not exceed the original costs;  - If time spent in the substitute accommodation exceeds more than 14 days, and no laundry  facilities are provided, the provider will pay for any laundry costs that are incurred;  - When tenants transfer from the substitute rooms to the completed development, an appropriate removal service will be provided to move all the tenant’s belongings or appropriate removal costs will be reimbursed against submitted receipts;  - Any additional out-of-pocket expenses incurred by the tenant as a direct result of taking up the substitute accommodation (e.g. travel costs in excess of that which they would in any case have had to pay) will be reimbursed in full against submitted invoices; - Where the tenant’s original offer included access to WiFi, a similar service should be supplied to them within the alternative accommodation free of charge;

Only 1 provider did not fully comply with this and that was in respect of providing an appropriate meal service for the evening meal.

In addition where tenants were in alternative accommodation particularly hotels most providers made additional storage available at no cost to the students.

Facilities in the Building When Occupied

In some buildings the students’ rooms were ready but not all the facilities were.  It is clear that in a delayed residence the builder concentrates on ensuring the rooms are ready. 

The lack of facilities are not specified in the late buildings part of the National Code other than to mention that arrangements should be made to provide similar facilities in the alternative accommodation.

There is however a section on marketing that states:

Managers will ensure that

3.0 All property details are reported accurately without misrepresentation to prospective tenants and in accordance with The Consumer Rights Act 2015, the Advertising Standards Agency’s The CAP Code: The UK Code of Non-broadcast Advertising, Sales Promotion and Direct Marketing and all regulation relating to mis-selling regulations. This will include details provided in brochures and websites. Where a development is being promoted in materials produced by an educational establishment then the organisation will request the educational establishment to make clear if the operator of the scheme is not the educational establishment and will also request the educational establishment to state clearly the management organisation charged with both tenant and building responsibilities;

Where communal facilities were not available providers ensured there were alternative arrangements for the tenants such as laundry services, gym membership nearby and events organised if the common room was not available on arrival.

Of the 7 providers affected, 4 made payments to tenants to recognise the lack of facilities.

Observations

Inconvenience payments

Over and above the arrangements/costs to the provider necessary under the Codes all but 3 of the providers paid an inconvenience payment to their tenants.  The level varied between providers but in general they were adequate to generous.

The payments were paid as third party vouchers, rent refunds or direct payments to bank accounts.

Informing Educational Institutions

The majority of providers did not feel it was necessary to inform the institutions as they were marketing direct to students and did not feel that there was a relationship with the institution in that way. 

Some providers did inform the institution, often to see if the institution could provide any alternative accommodation.  Some worked well together to establish support for the students.  The investigator could see the benefits to the tenants where this was done.

It was important that communications received by the institution were used to assist students and provide a unified institutional/provider message and advice

Communications with Students

Some providers had given a great deal of consideration to the communications with tenants and their emails were concise, informative and comprehensive. 

Others have done their best but their correspondence did not come across so well and were lacking in directive. 

It is suggested that providers approve communications with tenants at a high level within the supplier organisation (if this is not already done).  Some mentioned obligations under the tenancy agreement but not those of the Code so it looked like they were being generous when in fact they were just complying with the Code.

The best letters were those that were clear about what help and financial payment they were offering for the time of the delay and what would happen in the case of further delays.

Conclusion

Those managers found to be non-compliant are being contacted to ensure that any monetary payments made should be made and that the manager accepts their failure to comply and assures the National Code Administrator of future compliance. Failure to rectify matters or give those assurances will see the non-compliance being referred to the National Codes Tribunal for further consideration.

Improving the Codes

Some initial thought has been given to changing the Codes to be more proscriptive in detailing a more rigorous approach to late buildings and following this investigation and discussions with NUS it is likely that the ANUK/Unipol Codes will be strengthened in a number of areas:

1. tighter definition of what a late building is, detailing obligations where partial completion has taken place or where, although all the students are roomed, there has been a loss of communal facilities.
   
   
2. telling students as early as possible did not always take place and penalties need to be strengthened (both financial and membership) to encourage this. It is understandable that telling students a building may be late without a solution is resisted - but this should take place nevertheless.
   
   
3. the National Code Administrator should be sent copies of letters sent to tenants informing them about their room being late and detailing the response and the NCA should keep these letters on file as a definitive record of the response to the consumer by the responsible body
   
   
4. when informing students about a late building the suppler should always offer the student the option of leaving the contract within a defined period (probably 7 working days). This surrender of tenancy by the student will be confirmed in writing. In most cases students do not want this, but some do and simply want to cut loose and they should be allowed to do this with no further hassle. If no response is received from the student within the timescale stipulated the default position is that the contract will continue to run.
   
   
5. there is currently no requirement in a direct let arrangement for providers to inform educational institutions whose students will be affected. This obligation should be added to the Code. Again, institutions should be informed at the earliest opportunity so that they can help with the any solution.
   
   
6. in some areas, although accommodation was available, it was not made available to students for a short term let because the provider hoped to have a longer term let and a more co-operative approach could have been taken.
   
   
7. in some cases suppliers would have been better taking a more pessimistic view of stated completion times and should have booked temporary accommodation for longer. Not only would this have made it easier to find accommodation but would have stopped a rolling “moving in” day which is unsettling and undesirable for students.
   
   
8. with the rising number of late buildings ANUK/Unipol will be suggesting that an automatic “no quibble” payment is made to students as follows:
   
   £200 if the room is a week late (also applicable if the student leaves the contract)
   £500 if the room is a month late
   an additional £100 per student each time a student is given a moving in date that has to subsequently be changed (if that change is later than the date given).
   
   There are other contractual matters that Unipol will work more closely on with the British Property Federation, particularly in suggesting a framework for accommodation managers to be able to pass the cost of payments and alternative provision to builders and developers. The New and Refurbished Buildings Protocol will also be developed and should be countersigned by developers. The existing Protocol can be accessed here
   
   
9. where students have not been moved into their rooms by 1st December in the same academic year then no rent should be charged until that date and students should be given a second option to leave their contracts within a 7 day defined period to come to an end on 1st December. This surrender of tenancy by the student will be confirmed in writing.

These matters will be subject to formal consultation soon and all members will be circulated for their views.

Any views on this report and the suggestions outlined are also welcomed and can be sent to The National Codes Administrator.