Student tenancies during COVID-19 - A landlord’s perspective

All of us are facing uncertainty right now. The COVID-19 pandemic has effectively silenced any plans most of us had for 2020 and for most businesses, things have never been harder.

This is equally true of landlords. Because, whilst they have been offered a three-month payment holiday on mortgages by the Government, the ramifications of coronavirus are bound to stretch well past June. Where landlords that rent to students are concerned, things are even more complicated.

Indeed, this is a particularly challenging time for students and the landlords who rent to them. So, what are the specific things landlords should be doing to ensure they are looking after both the rights of student tenants and their own bottom line at this time?

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The legal considerations

Student accommodation has emerged as a rather pressing concern during lockdown for various reasons. The problems will range from the immediate to the long term. For example, there are some students, who could be worried about whether or not their tenancies will be extended if required, and some students due to start in September might worry about being held to tenancies they won’t ultimately be able to fulfil.

The official line for all students is to go home where possible, which obviously leaves landlords in a potentially awkward situation as accommodation agreements/housing contracts are still legally binding and they are liable for rent until the end of their fixed-term tenancies. As with families and other tenants, it’s up to landlords to decide whether they will agree to end agreements early or negotiate with student tenants around rent repayments.

This could potentially leave a property unoccupied for longer than landlord insurance will cover. Typically, insurers will provide unoccupancy cover for up to 90 days during void periods when a property is empty, such as when student properties are usually empty over the summer period. This cover usually covers severe property damage from extreme circumstances – fire, lightning, explosions, earthquakes, smoke and aircraft crashes – and has other restrictions in place. It’s important to check your policy to see how well your property is covered, and for how long. 

Some insurers are issuing void extension periods for policies that currently only cover landlords for up to 60 days, but this is happening on a case by case basis. Landlords with our Hamilton Fraser Total Landlord Insurance Premier policy are covered for up to 90 days. 

Inspections are particularly important for empty properties, and can still be carried out safely during this crisis.

When a property is left unoccupied for more than 30 days you need to notify your insurer and carry out weekly inspections of both the inside and outside of the property, keeping clear written records and rectifying and defects revealed. 

Between 1 November  and 31 March  landlords must:

  1. Ensure that the water supply is switched off at the mains and the entire water and central heating systems are drained of all water
  2. Or continuously maintain the heating at a minimum of 10°C throughout the entire property 
  3. Keep the loft hatch door open to allow air to circulate. 

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Student considerations

As with all things related to the fallout of the pandemic, very few cases are going to be exactly the same, but many students should still be able to afford their rental payments as they will be living at home (most likely rent-free). Student loan payments are also generally distributed in April and September, so this is something they should already have budgeted for. 

This won’t be true in all cases, though, with many more students who rely on part-time work to pay their rent now unable to work due to the pandemic. Of course, even many part-time staff members are covered by the Government’s furlough scheme, but it doesn’t apply to those who might have just started a new job, which is common in student circles, where moving from job to job is often necessary.

These are all factors to take into consideration when planning your strategy, so it’s important to approach every student as an individual.

As with all tenants, communication, consideration and transparency are always key.

On the communication front, it’s vital that you have an open dialogue with your tenants and know whether or not they will be moving home to isolate and whether or not they plan on returning before the end of the year.

There’s also the matter of what landlords should be doing about any possessions left behind.

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Rent and arrears

The chief concern amongst many students is that they will be forced to pay for accommodation they are no longer using whilst they are isolating at home with their families. Over 60,000 people have already signed a petition calling for student accommodation providers to waive rental fees for this current term and some have played ball.

According to the student housing charity Unipol, as of 11 April, 60 universities in the UK had confirmed they would “refund, waive, or terminate contracts”, while a further 52 had stated they would either continue with current contracts or were yet to make a decision.

When it comes to students renting from private landlords, however, things are a little more complicated. The vast majority of students living in private accommodation are doing so under a joint and several tenancy agreement, which means they are jointly liable for rent. This might soften the blow somewhat, as the load will be shared between several individuals. Some private landlords have reduced rents substantially as a sign of solidarity, but they are under no legal obligation to do so.

Of course, the decision for students to leave their properties and return home is ultimately up to them in most cases, so landlords are on solid legal ground if they wish to continue charging rent while the property is unoccupied. Note that most students will also have guarantors in place who will be able to pay their rent in the event they are unable to do so.

However, we would always recommend discussing if this is a financially viable option with your tenants particularly given the mortgage holiday offered to landlords in this country. Otherwise, you run the risk of alienating your tenants and cultivating a fractious relationship. It’s also worth checking whether or not there is a break clause in their tenancy agreement, which would allow them to end the agreement early.

This is quite common in halls, but less so in private rental situations. Note, however, that in many break clauses it’s often required for tenants to find a replacement tenant, which is obviously very unlikely right now.

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Other considerations

Possessions – A contract will generally ask tenants to clear and clean their property by the end date, but there is the possibility that the tenancy will end before tenants are able to return to collect their property. Landlords should communicate with their tenants if they are worried about possessions being left in properties and an agreement should be made between the two parties about what is to be done with those possessions. 

SupportWhilst there are few legal implications, the Government has suggested that it’s important for landlords to offer support and understanding to tenants whose income level might be affected by the pandemic. This means having a conversation early in on the process to reach a temporary agreement regarding lower rental payments or an agreement to pay arrears at a later date.

Coronavirus Act 2020 – This act protects tenants from being moved out of accommodation without a court order, which is in line with Public Health England advice. This means landlords will not be able to seek possession of a property for an initial 90 day period from 27 March onward.

 

Working together

Around 29 per cent of students studying in the UK utilise private rented accommodation during term time – so it represents big business for landlords across the country. If we are to continue enjoying a good relationship between landlords and students, we’re going to have to work together to get through this in the most mutually beneficial way possible. And that is going to require a lot of conversation.

Landlords need to get ahead of the situation and open a dialogue with their student renters. Be prepared to negotiate and to put anything important in writing (even in an email). But most of all, be prepared to listen to the needs and fears of your tenants and react accordingly, even if that reaction might seem overly generous. Because unprecedented times often call for unprecedented measures.

For more information on how to work with tenants through the coronavirus crisis, read our full COVID-19 guide.

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