Members of the Code will benefit from recognition under the Renter’s Right Act, and Unipol recently published an update on this here. But, Members need to be aware of and prepare for a temporary Transitional Phase after the Bill becomes law.

Will Members of the Code be able to convert existing Assured Shorthold Tenancies (AST) into common law tenancies when the Bill becomes law?

At present, PBSA private providers issue ASTs. The Renters’ Rights Bill makes it clear that only tenancies granted after specified status has been granted to Members will be common law tenancies:

“a tenancy is exempt solely by reference to a code of practice, if the tenancy was granted by a body of persons who were, at the time of the grant, a specified landlord solely by reference to a code of practice,”

This means that when the Bill becomes law, Members of the Code who have ASTs in place will find that these convert to Assured Tenancies for a period and are subject to most provisions of the Act. At this stage, it is not known exactly when the Bill will become law but this is expected sometime in the 2025 – 2026 academic year.

Why can’t ASTs change straight to common law tenancies?

During the Lords’ Report Stage Baroness Taylor gave the first proper explanation of why ASTs could not convert into common law tenancies. She said:

“To apply the exemption retrospectively would carry significant risk, as it would turn one of these existing PBSA tenancies into what is known as a “common law” tenancy: that is, a tenancy almost entirely regulated by what is in the tenancy agreement. This could cause unintended consequences, such as those PBSA tenancies containing significantly fewer rights for tenants than the assured shorthold tenancies they will have signed. It could also cause problems for the landlord and a number of those tenancies in the event that the tenancy agreement does not give them adequate forfeiture rights. We do not consider it to be the right approach, therefore, to simply exempt pre-existing PBSA tenancies from assured tenancy status.”

So, those students who were on ASTs will become Assured tenants and the Act’s provisions will apply to them during what is known as “the transitional phase”.

Transitional Phase – Special Arrangements

There have been some concerns from Members about likely issues resulting from the Transitional Phase, and the Government have introduced some further amendments in response.

Baroness Taylor whilst explaining that there would need to be a transition phase said:

“That said, it is important that PBSA landlords under these existing PBSA tenancies can still access the possession grounds, in particular ground 4A. To ensure that the exemption operates as intended, Amendment 125 modifies ground 4A when applied to pre-existing “qualifying student tenancies”. These are PBSA tenancies, in other words.”

The Government has recognised the concerns of the sector and accepted that this transitional phase should be as smooth as possible, hence the recent amendments to the Bill. This will set out the following approach for Members. The:

• property will not have to be an HMO to use ground 4a repossession

• July-September time frame 4a will not apply

• signing tenancies less than 6 months in advance to have access to ground 4a will not apply

Within 28 days of the transition date, landlord will have to give tenants notice that ground 4A will apply if they intend to seek repossession.

These one-off interim transitional period arrangements will still cause some rental loss (by students being able to give 2 months’ notice at any stage) and operational difficultly, and obviously the date of implementation of the Bill will be important here. Students will need clear information to avoid confusion.

Timing

The extent and impact of the transitional period will depend on when the Act becomes law. Report Stage in the House of Lords is timetabled to finish on 21st July, and a number of later amendments to the Bill now mean it will need to be sent back to the House of Commons for consideration (ping pong). The earliest this is now likely to be is sometime between 1st and 16th September. But it may be later than that because there is a two week break for the party conferences after this, and priorities for Parliamentary business can always shift if more urgent matters arise.

In conclusion

It is the case that the simple explanation offered by the Minister of Housing that PBSA suppliers who are members of an Approved Code would fall outside of the provisions of the Act has changed. As the Bill has developed, the complexity of changing tenancies mid-agreement came into focus. It may have been possible for this to have been made clearer at an earlier stage, but ultimately the constraints in place would have made no difference to the outcome.

Since then there have been efforts by MHCLG to smooth the issues where possible in recognition of the problems it could cause for the sector. It must also be remembered that after these time-limited problems, Members have been recognised with specified status that will grant considerable long-term advantages as detailed here.

As the Bill progresses through its final Parliamentary phases, the timetable for implementation will become clearer, and Members will have time to prepare tenant communication and put in place temporary operational procedures. The National Codes will continue to brief Members as the situation changes.

For questions or further information please email [email protected]